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Govt to restrict power rate hike at 18%

21
Jul '10
An Energy Minister recently stated that, the government, moved by strong criticisms from the side of industry circles, has agreed to restrict the hike proposed by it in the rates of electricity to 18 percent.

Energy and Mineral Resources Minister, Darwin Zahedy Saleh, while speaking before the House of Representatives Commission VII, an authority supervising the energy and mineral resources, informed that, the raise would be maximum to the extent of 18 percent for industries, while the raise on an average would be somewhere around 10-15 percent.

The Ministry on July 1 came out with a ministerial directive specifying the new rates for electricity. Government in previous consultation with the House and the business community asserted that, the rates would at the most be hiked by 18 percent and that the average would be maintained at 10 percent.

Nevertheless, the regulation later, was strongly criticised by a number of business groups who contended that, the raise actually was much on the higher side than that assured by the government.

Indonesian Employers Association (Apindo) Chairman, Sofjan Wanandi, who was also present at the consultation at the House, said that, as per their computations the actual rise in rates ranged somewhere around 39 to 101 percent.

In the meantime, at some other room of the House, 32 business organizations moved the House Commission VI supervising the trade, industry and investment, with their demands to shelve the regulation.

Ade Sudrajat, Deputy Chairman of the Indonesian Textile Association said that, the recent hike in power rates would hike the prices of Indonesian textiles by around 7.2 percent. He continued by saying that, this would render the domestic products in-competitive in their own country as the price hike is not going to have an impact on imported goods.

According to Silmi Karim, Deputy Chairman of the Indonesian Young Entrepreneurs Association (Hipmi), such raise would beget higher inflation rate compelling the Bank Indonesia to hike its standard rate of interest.

This construes that, the capital cost for businesses will go up and this won't be favourable news for small and medium enterprises, constituting around 95 percent of Hipmi's member list.

Fibre2Fashion News Desk - India


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