Electricity Bills Increase Only Triggers 0.019 Percent Inflation

JAKARTA - The Indonesian government has officially announced an increase in electricity tariffs for non-subsidized household customers of 3.500 Volt Ampere (VA) and above starting July 1.

The Director General of Electricity at the Ministry of Energy and Mineral Resources, Rida Mulyana, said that the policy of increasing electricity tariffs only had an impact on inflation of 0.019 percent.

"We have calculated that the impact on inflation is only 0.019 percent, so it's almost not felt," Rida said as quoted by Antara, Monday, June 13.

Rida explained that the electricity tariff adjustment still contributes to maintaining the purchasing power of the people as a whole. The reason is that the government only raises electricity rates for households with middle to upper or near-luxury economies.

According to him, the policy of increasing electricity rates has contributed to saving compensation of IDR 3.1 trillion or 4.7 percent of the total compensation that the government has disbursed to PT PLN (Company).

The government raised electricity tariffs because four macroeconomic indicators increased, especially high world crude oil prices, thereby increasing the burden of electricity production.

Meanwhile, President Director of PLN, Darmawan Prasodjo, said that every USD 1 increase in world crude oil prices has an impact on the overall cost of production of up to IDR 500 billion.

"The assumption of the state budget at the beginning of this year is only 63 US dollars per barrel from the current price of Indonesian crude oil (ICP) which is approaching almost 100 US dollars per barrel. So there is an extraordinary increase, of course the cost of production also increases," said Darmawan .

The policy to increase electricity tariffs is only applied to non-subsidized households, which amount to 2.09 million customers or 2.5 percent of the total PLN customers which reach 83.1 million and also to the government group, which amounts to 373.000 customers or 0.5 percent.

The number of non-subsidized household customers with 3.500 VA power was recorded at 1.7 million customers and 6.600 VA powered households as many as 316 thousand customers with adjusted tariffs from IDR 1.444.7 per kilowatt hour (kWh) to IDR 1.699.53 per kWh.

Meanwhile, government customers with power from 6.600 VA to 200 kilovolt amperes (kVA) also experienced an increase from the previous IDR 1.444.7 kWh to IDR 1.699.53 per kWh.

As for government customers with power above 200 kVA, the tariff is adjusted from IDR 1.114.74 kWh to IDR 1.522.88 kWh.