Airlangga Decides No Increase In Electricity And Fuel Tariffs Until June 2024

Coordinating Minister for the Economy Airlangga Hartarto (Photo: Doc. Antara)

JAKARTA - The government has confirmed that it will not increase electricity and fuel oil tariffs (BBM) for subsidies and non-subsidies until June 2024.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the decision not to increase electricity and fuel rates had been agreed in a cabinet meeting on Monday, February 26, chaired by President Joko Widodo (Jokowi).

"Earlier it was decided in the plenary cabinet session, there was no increase in electricity, no increase in fuel to juni, be it subsidies and non-subsidies," he told the media crew, Monday, February 26.

Airlangga said that because there was no tariff increase, the government needed to spend additional budgets for PT PLN (Persero) and PT Pertamina (Persero) from excess budget (SAL) and also widening the 2024 APBN deficit.

"It will require an additional budget for Pertamina and PLN. It will be taken from the remaining SAL or widening of the budget deficit in 2024," he said.

Airlangga added that with the additional budget needs, one of which will make the 2024 APBN fiscal deficit widen to 2.3 percent to 2.8 percent of Gross Domestic Product (GDP), from the initial target of 2.29 percent of GDP.

"So it's 2.3 percent - 2.8 percent. Next year it will be in the same framework 2.4 percent -2.8 percent, so it's realistic," he said.

Airlangga added that the widening of the deficit was also due to the addition of fertilizer subsidies of Rp. 14 trillion. The addition of fertilizer subsidies to adjust the real needs of farmers is 7 to 8 million tons per year. This is because the current fertilizer subsidy budget of Rp. 26 trillion is only sufficient for 5.7 million tons per year.

"Why is the fertilizer subsidy added because we need fertilizer according to the annual amount. Usually, it's around 8-7 million tons. So it's clearly not enough and it's reflected in rice production not only because of fertilizer, but because El Nino has decreased a lot. January-March is demand and the supply delta is short of 1 million," said Airlangga.

In addition, Airlangga added that there was also a direct cash assistance (BLT) program to mitigate food risk of IDR 11.3 trillion.

"BLT has increased for fluctuations in the mitigation of basic food prices, the value is already Rp. 11 trillion," said Airlangga.

Previously, the Ministry of Energy and Mineral Resources (ESDM) decided whether the electricity tariff in the first quarter or January to March of 2024 for 13 groups of non-subsidized customers remained or did not change.

The Director General of Electricity, Jisman P. Hutajulu explained that this policy is part of the government's efforts through the electricity sector to maintain the competitiveness of business actors, maintain people's purchasing power and maintain inflation levels.

"The electricity tariff from January to March 2024 has been decided to maintain the competitiveness of business actors, maintain people's purchasing power and maintain inflation levels in the new year," said Jisman in an official statement, Thursday, December 28.

Jisman conveyed that the macroeconomic parameters used for the first quarter of 2024 were realization in August, September, and October 2023, namely an exchange rate of IDR 15,446.85 per US dollar, ICP of 86.49 dollars per barrel, inflation of 0.11 percent and HBA of 70 US dollars per ton according to the coal DMO policy.

Furthermore, Jisman explained that the electricity tariff for 25 subsidized groups of customers also did not change and was still given electricity subsidies.

"This includes social customers, poor households, small industries, and customers who use electricity for micro, small and medium enterprises or MSMEs," said Jisman.