REPUBLIKA.CO.ID, JAKARTA -- Employers have objected to the government's plan of totally revoking the electricity subsidy for big industries this year and hoped for a stage-wise implementation over a period of two to three years.
On Monday, General Chairman of the Indonesian Employers Association (Apindo) Sofyan Wanandi stated here that the industrialists had raised objections to the government's plan of rescinding the subsidy all at once in 2014.
"We agreed to the revocation of the subsidy, but it should not be done within a year, but instead, in stages, over a period of two to three years. If it is done all at once this year, it may reduce competitiveness," he pointed out.
He noted that he was hopeful that the government will not totally revoke the 65 percent subsidy for the industrial customers using 30 thousand kVA (I4) in 2014, but instead, in stages spread over a period of two or three years.
"They may perhaps cut the subsidy by just 25 percent this year and not totally 65 percent," he noted.
"We hope the hike will be just 15 percent in 2014," he stated with regard to the subsidy for the I3 group of industries which use 200 kVA and recorded at 38 percent.
Sofyan Wanandi emphasized that only after a period of two or three years, should the I3 and I4 groups of industries be totally free of electricity subsidy.
The government plans to revoke the electricity subsidy by raising the electricity tariff for the I3 group of companies that have been publicly listed in the stock exchange as well as the I4 group of companies.
The hike to meet the economic scale will indeed be implemented in stages, but it will be over in 2014.
The plan is yet to be discussed with the House of Representatives' Commission VII on Tuesday, although they agreed to it during the discussion on the 2014 national budget.
According to the data received by the state-owned electricity company (PLN), industrial customers that will be affected by the policy reached 432, comprising 371 I3 category companies and 61 I4 category companies.
The implementation of the plan to remove electricity subsidy in 2014, will decrease the subsidy by Rp7.9 trillion comprising Rp1.3 trillion from I3 industries and Rp6.6 trillion from I4 industries.
The total I3 customers are recorded at 10,835 and 3.6 percent of them or 371 are public-listed companies.
The total 10,835 companies consume 4,042.6 GWh/month, while the public-listed I3 companies consume 324.8 GWh/month or 8.03 percent of the total.
In August 2013, the subsidy for the I3 customers, with assumed consumption, was recorded at Rp16.26 trillion a year, while the subsidy for 371 public-listed I3 companies reached Rp1.3 trillion per year.
The subsidy for 61 companies under the I4 category was worth Rp6.6 trillion a year.
Based on the Law Number 23 of 2013 on the 2014 national budget, allocation of electricity subsidy was set at Rp71.4 trillion, including the shortage of payment in 2013 at Rp3.5 trillion.
Apart from that, the reserved electricity subsidy was set at Rp10.4 trillion or five out of the seven percent margin given by the PLN.
The use of reserved subsidy needs to be approved by the Budget Committee of the House of Representatives.
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