According to calculations, raw materials constitute 50 percent and electricity, 30 percent, of the production cost. So if the basic electricity tariffs are raised for industries, it will have an impact on the sale prices of industrial products.
Jakarta (ANTARA News) - Burdened by the depreciating value of the rupiah against the U. S. dollar, industries hope that the government does not raise the electricity tariffs anymore this year.

This is because power fares contribute some 30 percent to the production costs borne by industries.

"We hope the government does not raise the basic tariffs of electricity for industries this year because it will increase our production costs," Chairman of the Indonesian Employers Association (Apindo) for Central Java Frans Kongi said on Tuesday.

The industrial sector bears the burden of the weakening of the rupiah against the U. S. dollar because local industries still depend on imported raw materials.

According to calculations, raw materials constitute 50 percent and electricity, 30 percent, of the production cost. So if the basic electricity tariffs are raised for industries, it will have an impact on the sale prices of industrial products.

Kongi also hopes that if the government is resolved to increase the electricity tariffs, it should increase those for household consumers who make up the largest customer group of state-owned electricity company PLN.

"For example, if the electricity tariffs for household consumers are raised by Rp5,000, it will not significantly affect production and goods prices. However, if such an increase is imposed on industries, it will have significant impacts on production and goods prices," he explained.

Moreover, the Indonesian Chamber of Commerce and Industry (Kadin) is also of the same opinion. It said that an increase in electricity tariffs will affect the production costs borne by companies as power accounts for 15 to 20 percent of the total expenditure.

"The electricity component contributes about 15 to 20 percent to the production cost. So it will have an impact on it," Chairman of Kadin Suryo Bambang Sulisto stated on Monday.

He added that if electricity tariffs were increased by 20 percent, production costs would increase by about 2 percent. Despite this small increase, it will still have a significant impact on the production cost.

Business players want electricity tariffs to be lowered so production costs can be reduced, the Kadin chairman pointed out.

According to Kongi, the industry that will be affected the most by an increase in electricity tariff is the textile industry, as nearly all its production processes are supported by machines. Steel and hotel industries will be the next most-affected ones.

Instead of raising the power tariffs, Kongi hopes that the government would provide optimal support to the growth of domestic industries by increasing the volume of exports.

"The strengthening of the greenback should have been utilized to boost exports. If the turnover of industries increases, it will add to the states foreign exchange reserves as well," the Kadin chairman for Central Java pointed out.

State-owned power utility company PLN raised the electricity tariffs for non-subsidized power consumers in April from those in March. The tariffs were raised after being lowered for seven consecutive months since September 2014.

In April, the non-subsidized electricity tariff for five groups of customers was set at Rp1,465.89 per kilowatt-hour. The tariff was raised by Rp39.31 per kilowatt-hour, or by 2.75 percent from the Rp1,426 per kilowatt-hour rate in March.

Following the electricity tariff hikes, some 1,000 customers in West Nusa Tenggara urged the local PLN office to lower the capacity of their electricity voltage.

Manger of PLN for the Mataram Office in West Nusa Tenggara province, Bagus Hari Abrianto, noted that many non-subsidized electricity customers had asked for the capacity of their voltage to be lowered to 900 volt-amperes to obtain subsidized power supply.

"Customers who receive power capacity of 1,300 volt-amperes have asked us to lower their voltage capacity to 900 volt-amperes. I do not know the exact number of customers who requested for this, but there are more than 1,000 customers for sure," Abrianto affirmed on Monday.

He added that the customers had asked for the lowering of their power supply capacity following rumors that PLN will raise its tariff for customers of 1,300 volt-amperes and above in May. However, the rumors were denied by PLN itself.

According to Abrianto, the planned hike of electricity tariffs for the non-subsidized customer group will have an impact on the customers spending, particularly on micro, small and medium enterprises who fall under the 1,300 volt-amperes category.

"There is a significant difference in tariff for the customers of 900 volt-amperes and 1,300 volt-amperes. The tariff for the former group is only Rp600 per kilowatt-hour, while that for the latter group is Rp1,352 per kilowatt-hour," he pointed out.

PLN has raised the tariffs of non-subsidized electrical power for April, after it lowered them in March for the seventh month in a row since September last year.

The tariffs of non-subsidized electrical power for five groups of customers are set at Rp1,455.89 per kilowatt-hour, the company said on its official website on Thursday.

The tariffs were raised by Rp39.31 per kilowatt-hour, or by 2.75 percent from the Rp1,426.58 per kilowatt-hour rate in March.

According to data from the state power utility company, the tariffs of subsidized electrical power for customers R1 with a capacity of 1,300 volt-amperes and customers R1 with a capacity of 2,200 volt-amperes remain unchanged at Rp1,352 per kilowatt-hour.

The five groups of non-subsidized customers who are subjected to a tariff hike of Rp1,465.89 per kilowatt-hour in April are middle-class households R2 with a capacity of 3,500 to 5,500 volt-amperes, large households R3 with a capacity of 6,600 volt-amperes and above, medium businesses B2 with a capacity of 6,600 to 200,000 volt-amperes, government agencies P1 with a capacity of 6,600 to 200,000 volt-amperes, and public street lighting P3.

Moreover, the electricity tariffs for other non-subsidized customers, including large businesses B3 with a capacity of above 200,000 volt-amperes, large industries I3 with a capacity of above 200,000 kilo-volt-amperes and government agencies P2 with a capacity of over 200 kilo-volt-amperes, are set at Rp1,135.93 per kilowatt-hour, up from Rp1,105.47 per kilowatt-hour in March.

Also, the tariffs for large industries I4 with a capacity of 30 megavolt-amperes and above increased to Rp991.6 per kilowatt-hour from Rp965 per kilowatt-hour, while those for special groups L/TR, TM, and TT rose to Rp1,542.84 per kilowatt-hour from Rp1,501.46 per kilowatt-hour.

With regard to rumors that the tariffs will increase again next month, PLN gave its assurance that it will not raise electrical power tariffs in May.

"There will be no power tariff hikes in May. The tariffs of subsidized electrical power for customers with a capacity of 900 volt-amperes, 1,300 volt-amperes, and 2,200 volt-amperes will not be raised either," President Director of PLN Sofyan Basir affirmed on Tuesday.

The tariffs of electrical power for household customers with a capacity of 3,500 volt-amperes to 5,500 volt-amperes and large household customers with a capacity of 6,600 volt-amperes and above will follow the tariff indicators in the market, which could affect the cost of power supply, he pointed out.(*)

Reporter: Andi Abdussalam
Editor: Heru Purwanto
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