The Price Of Gas From Power Plants Has Decreased By Rp.14 Trillion Throughout 2020, What About The Public Electricity Tariff?
PLN officers are checking an electrical installation belonging to one of the residents. (Photo: Doc. PLN)

JAKARTA - The Director General of Electricity at the Ministry of Energy and Mineral Resources, Rida Mulyana, said that the natural gas price policy for electricity was able to reduce the budget for electricity subsidies throughout 2020.

The price of natural gas, which was previously set on a business-to-business basis between PLN and gas producers, or assumed to be US $ 8.39 per million British thermal units (MMBTU), has set the upper limit to be US $ 6.30 per MMBTU.

The contribution of lowering natural gas prices for electricity reached around IDR 14 trillion or 37 percent of the BPP fuel cost savings (cost of supply).

This figure shows that Government policies also have a major effect on saving the state budget.

"That's huge. We can also suppress subsidies. This reduces electricity subsidies by making efficiency in the BPP of electricity managed by PLN," he said in an official statement, Thursday, January 14.

In addition to the fuel cost factor, the reduction in BPP was also due to savings in spending posture for personnel, maintenance, as well as administration, depreciation and interest.

As a result, this condition could reduce electricity subsidies to IDR 51.84 trillion or under the provisions of the State Budget (APBN) of IDR 54.79 trillion.

The Director General of Electricity, Rida Mulyana, explained that the subsidy savings were due to a reduction in the cost of providing electricity (BPP), which was originally set at IDR 359.03 trillion, to only IDR 317.12 trillion.

"Most of the savings were obtained from lower fuel costs due to the decline in the Indonesian Crude Price (ICP) and the stipulation of natural gas prices for electricity," he said.

Rida explained that the ICP price in the 2020 State Budget assumption is US $ 63 per barrel. Later, the ICP fell to US $ 35 per barrel.

However, at the beginning of this year PT PLN has provided information about the basic electricity tariff for the public. Quoting a broadcast from the official website, the electricity company confirmed that the 13 groups of non-subsidized customers had fixed rates or had not changed.

"This refers to the decline in electricity rates in the fourth quarter of 2020 after there has been no change in rates since 2015," said PLN.

This policy also provides certainty that there will be no increase in the basic electricity tariff for at least the first quarter of 2021.

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