JAKARTA - The state-owned power company PLN will propose to hike rates up to 30 percent for households and industries in the country to make the company profitable again. The proposal however was soon shot down by senior business representatives that said that such an increase would hurt economical growth.
"Price increases should be based on customer category and purchasing power," said Fahmi Mochtar, the president directory of PLN. "The increases are needed to cover our production costs as the government has cut the subsidy allocation in next year’s budget," he added. The company has four different scenarios for a price hike somewhere next year.
Household should pay some 20 percent more for their power if they only have a connection of up to 900 watts. A steep 37.5 percent increase is projected for those using power up to 6,600 watts. Prices of power are controlled by the state and now vary between 172 and 621 Rupiah per kilowatt hour. PLN says a price of 1,380 Rupiah is needed to fully cover the costs. Businesses and industries do not receive subsidized power. Their prices can increase with some 30 percent as well.
Last month, a total of 35.3 trillion Rupiah (2.5 billion euro) was allocated for power subsidies in the year 2010. On top of this is some 2.5 trillion Rupiah in subsidies left over from this year. PLN however, said that it would need at least 50 trillion Rupiah (3.5 billion euro) to cover operating costs and has therefore proposed a steep increase of prices.
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JAKARTA - The state-owned power company PLN will propose to hike rates up to 30 percent for households and industries in the country to make the company profitable again. The proposal however was soon shot down by senior business representatives that said that such an increase would hurt economical growth.
