Gov’t Scraps Plan to Adjust Electricity Tariff

In a bid to maintain people’s purchasing power and stability of national economy, the Government has announced it will cancel electricity tariff adjustment for 900 volt-amperes (VA) households.

“There will be no electricity price adjustment. We want to maintain economic stability,” Minister of Energy and Mineral Resources Arifin Tasrif said in Jakarta, Friday (27/12).

According to Arifin, the Government has asked state-owned electricity company PT PLN to verify the data on 900-VA customers so that tariff adjustment policy later on can be well-targeted.

“We are still conducting data collection in more details. PLN should provide us the data first because policymaking needs to go through several stages from relevant institutions,” Arifin said.

Afterwards, data on PLN customers will be harmonized with the data from the Central Statistics Agency (BPS) regarding the number of non-poor households (RTM).

Based on PLN’s data as of October 31 this year, the total number of 900-VA households reaches 22.1 million and it will be increased by up to 24.4 million customers next year.

The electricity tariff for the 900-VA subsidized households will be set at Rp1,352 per kilowatt-hour (kWh) with 24.4 million customers, while non-subsidized tariff for 1,300-VA to 6,600-VA households will be adjusted at Rp1,467.28 per kWh.

According to Arifin, the cancellation of electricity tariff adjustments will not provide additional electricity subsidies and will not burden the 2020 State Budget as well, adding that PLN is also expected to cut the use of fuel in its power plant to improve efficiency.

“It will be more efficient if we can save fuel. We have asked PLN to immediately shift to cheap energy,” he said.

Another step the Government will take is to draft regulations relating to the extension of the policy for special domestic coal prices (Domestic Market Obligation), Arifin added.

“We aim to keep the electricity tariffs through this regulation,” Arifin added.

As for the DMO target, Arifin said it will remain at 25% of coal production and the price is US$70 per ton.  “It remains stable,” he said, adding that the Government is currently drafting the DMO regulatory.

For the record, the DMO is regulated under Ministerial Decree of Energy and Mineral Resources Minister Number 1410 K/30/MEM of 2018. According to the decree, coal prices for PLN are also set at a maximum of US$70 per ton. (PR of Energy and Mineral Resources Ministry / ES)

Translated by: Syarifah Aisyah
Reviewed by: M. Ersan Pamungkas