Quarterly Electrical Rate Hikes Ahead?

(8/26/2012)

The government is recommending a change in current policy that would allow automatic adjustments in electricity charges once every three months starting from January 2013.

The Bali-born Minister of Energy and Mineral Resources, Jero Wacik, is defending the change in policy to meet rising energy costs and reduce the cost of subsidies paid by the government to provide power supplies. 

Wacik has issued assurances that homes with only 450 watts of power will be exempted from any increase in power costs, with future increases applied progressively on users enjoying high levels of electrical usage and deemed to be economically able to pay higher rates that are not subsidized by the government. 

At the same time, Wacik was unprepared to comment to what extent fuel subsidies will be reduced or eliminated, saying that was a matter for deliberation by the government and the House of Representatives (DPR).

He also said that future energy policies would look at alternate energy sources as a means of reducing a dependency on fossil fuels.

The Indonesian national budget is heavily burdened by subsidies. The 2013 State budget provides for Rp. 316.09 trillion (US$34 billion) in energy and fuel subsidies, including electrical subsidies of Rp. 80.83 trillion (US$8.7 billion).