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Revealing BPK audit may slash power rate hike JAKARTA - The Supreme Audit Agency (BPK) has found the actual cost for electricity generation for this year will be 4.3 percent lower than state power firm PT PLN's projection, sparking hope that a planned rate hike will be minimal or scrapped altogether. BPK revised down costs by Rp 4.9 trillion (US$524 million) to Rp 93.23 trillion, or Rp 833 per kiloWatthour (kWh), agency chief Anwar Nasution told reporters after submitting the audit report to the House of Representatives on Thursday. PLN previously estimated the average cost to generate one kWh of power at Rp 870.

According to the BPK findings, the state firm will need additional income of Rp 27.2 trillion to secure its operations without an increase in the power rate. The government has earmarked Rp 17 trillion of subvention for electricity this year, leaving a deficit of Rp 10.2 trillion. Commenting on the report, State Minister of National Development Planning Paskah Suzetta said that with the lower deficit, the planned power rate hike may be minimized. "We may not need to raise the rate altogether," he said.

In its audit that began on Feb. 7 at the request of the House, the BPK found the power company calculated 111.9 TetraWatthour (TWh) as the amount of power to be sold in its annual work and budget plan, but used sales volume of 112.8 TWh in simulations to determine the power rate hike. Head of the audit team Hasbi Ashidiqi said the BPK used the figures because the work plan was approved by the government in the general shareholders meeting and there was no valid explanation for the higher volume.

"With lower sales volume, the amount of high speed diesel to be used (to generate power) is automatically slashed," said Hasbi. With an assumed rupiah rate of 9,700 to the U.S. dollar, inflation of 8 percent and high speed diesel price of Rp 5,000 per liter, the team calculated that PLN would spend Rp 51.57 trillion for all kinds of fuel, lower than the firm's estimate of Rp 55.17 trillion.

Reduced costs also occurred for estimates of power bought from independent power producers, depreciation, maintenance and lending costs, amounting to Rp 1.3 trillion in total. In a Jan. 22 hearing with House Commission VII on energy, the government and PLN said that increases of between 15 percent and 20 percent on average would be required to cover deficits of Rp 9.2 trillion and Rp 12.2 trillion respectively.

House Speaker Agung Laksono said that the legislators would discuss the audit results with the government, with deliberation sessions expected to start next week. Meanwhile, the BPK also found that PLN could have saved Rp 12.15 trillion in fuel costs had several major combined-cycle power plants in Java, which are forced to burn oil-based fuel instead of cheaper gas, were supplied with sufficient gas.

The power company often faces difficulty in securing its gas supply due to protracted negotiations on prices, and because several producers require a guarantee of a letter of credit due to concerns about the firm's finances.



Posted in Economy @ 09 March 2006 15:06 CET by Jeroen · 'Blog' RSS feed · permalink






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