Gov’t to Postpone Electricity Tariff Adjustment Until June 2020

Ministry of Energy and Mineral Resources (ESDM) has decided to postpone electricity tariff adjustment until June 2020.

“It was based on various economic considerations. Currently, the Corona issue, like it or not, will lead to a less encouraging economy,” Director General of Electricity Rida Mulyana said in Jakarta, Wednesday (4/3).

The postponement, he said, is aimed to increase people’s purchasing power and industrial competitiveness amid the Corona issue which caused the prices of energy sources to go down.

Rida also said that this measure was determined by considering four parameters, namely the Indonesian Crude Price (ICP), coal prices, the exchange rate of the rupiah against the United States dollar, and inflation in the last three months, compared to price determination in 2017.

“(The tariff) has not been raised since 2017, so the comparison is to the one in 2017 and not the previous quarter. So, we have to review it in order to decide the increase or decrease of the electricity tariff,” Rida stated.

This determination, Rida said, certainly impacts the Basic Cost of Electricity Supply (BPP) of the National Utility Company PT. PLN. He ensured that the Government will prepare two payment schemes for PLN to prevent loss.

“It can be in a form of subsidies paid per month and there is also compensation mechanism regulated by Minister of Finance Regulation and calculated after an audit from the Supreme Audit Agency (BPK),” he said.

“Based on its rule, a tariff adjustment can be proposed every three months,” he said, adding that the electricity tariff should be announced a month before its validity period as an effort to increase the Ease of Doing Business index. This also becomes an effort for public transparency. (esdm.go.id/EN)

Translated by: Fairuzzamani Inayatillah
Reviewed by: Mia M. Bonaedy