Electricity Cost Down, Opportunities for Industry Increase Competitiveness


JAKARTA – The Ministry of Energy and Mineral Resources (ESDM) recently launched a policy to reduce the cost of electricity (cost of production for industry). According to ESDM Minister Mr Ignasius Jonan the reduction aims to help people and industry use electricity for more competitive impacts.

In accordance with the new regulation, the electricity cost is cut by IDR 15 per kWh to IDR 893 per kilowatt-hour in 2017 from IDR 908 in 2016. The decrease is said to be due to PT PLN’s more efficient management in producing electricity.

Nowadays, the need for electricity in various parts of the country continues to increase. To keep pace with the increasing national electricity demand, the government adds at least 7,000 megawatts capacity annually until 2019. Previously, government also stated its commitment to realise the supply of electricity amounting to 35 thousand MWs in five years from 2014 until 2019.

The decreasing BPP is assumed that PLN has succeeded in achieving efficiency. This opens up opportunities for people to better utilise electricity because the tariff is now more affordable. Inexpensive electricity rates also provide benefits for industry. The lowering electricity cost will reduce production costs. Thus, the price of products is cheaper, so the domestic industry can compete and encourage the national economic growth.

It is important that the national industry can compete with other countries. If electricity is expensive, industrial products find it hard to run, so they would lose competitiveness with other countries. High energy prices can also cause the slowing incomes of gross domestic product (GDP) as well as economic growth and society. (*)