What makes the subsidy to swell? It is because of the high production cost."Jakarta (ANTARA News) - Energy expert Dr M. Kurtubi said an increase in electricity tariff planned by the government would have an adverse effect on the countrys economic development.
The increase to start in May for a number of categories of consumers would cause inflation to soar, increase the number of poor people, and unemployment, Kurtubi said here.
The plan has been approved by the House of Representatives to increase the electricity tariff for big residential houses, industries, commercial buildings, hotels, office buildings and apartment buildings as well as government office buildings.
Kurtubi said the increase in the electricity tariff would result in bigger spending not only by industries but also households because of the soaring prices of goods and services.
"The reason given for the tariff increase is swelling subsidies. What makes the subsidy to swell? It is because of the high production cost," said.
He said the production cost is big because the government still uses oil fuel to generate power.
He went on with question as to why using the expensive oil fuel while the country has in abundance coal and gas which is much cheaper.
He said the cost of generating power with oil fuel is Rp3,000 per kwh as against only Rp400 per kwh with coal and Rp500 per kwh by using gas.
He said the solution to the rising subsidy problem is for the government to build more coal-fired or gas fired power plants.
"Electricity should be cheap in the country as we have large reserves of coal and gas, but PLN (state electricity company) has even to buy power from Independent Power Producers (IPP) at a high price," he said.
As a result of the use of oil fuel PLN suffers a loss of Rp53 trillion in three years, he said.
It is an inefficiency loss, but perhaps certain other parties gain from the policy, he added.
PLN produces electricity at a cost of Rp3,000 per kwh and sells it to its consumers at a price of Rp800 per kwh.
"It certainly a big loss. And the solution chosen is raising the selling price, while we could use cheap coal and gas," he said.
(Uu.H-ASG/F001)
Editor: Priyambodo RH
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