Indonesian Government Will Continue to Increase the Electricity Rate This Year
The Ministry of Energy and Resources stated that the Indonesian government will go ahead with the increase in electricity rates this year. Up to the end of this year, electricity rates will increase every quarter by about four percent to reach a total increase of 15 percent. In early January, the first rate increase was introduced by raising the tariff of electricity sold by state-owned Perusahaan Listrik Negara (PLN), the sole electricity provider in Indonesia.
The poorer segments of Indonesia are spared from the price hike as it will only affect people within the 1,300 VA segment or higher. Households of 450 to 900 VA - the poorer segments - will not be affected.
According to the Ministry, Indonesians consumption of electricity was generally reduced in January compared to the previous month, although businesses in fact increased their electricity consumption. On 1 April 2013, the next increase of 4.3 percent is expected.
Indonesia finances huge energy subsidies through its government budget. About US $20 billion is allocated for fuel subsidies, while about US $9.6 billion is used to keep electricity cheap. In particular the fuel subsidies are often criticized for distorting the economy.