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NEWS UPDATES Asean Affairs        28  February 2011

Controversial late night Indo rate cut planned

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State power utility Perusahaan Listrik Negara plans to cut industrial electricity rates for late-night use, it said on Sunday, but the plan is not favored by some manufacturers.

Tariffs will be lowered for industrial use between 11 p.m. and 7 a.m. During peak hours of 5 p.m. to 10 p.m., PLN claimed, it has to produce 5,000 extra megawatts of electricity. The proposed cut is aimed at encouraging industries to shift their operations to off-peak hours to help balance out usage.

“PLN is hoping to decrease electricity usage during the day. If possible, industries can move all their operations to the night,” PLN said in the statement, suggesting that industries would rather overtime costs than expensive power bills.

“This will also provide a chance for workers to earn additional income because by working at night they should receive additional pay,” said Dahlan Iskan, president director of PLN.

Industries pay an average of Rp 730 per kilowatt hour. If PLN’s proposal takes effect, they will pay Rp 550 per kwh for those overnight hours.

PLN public relations manager Agus Trimukti said in the statement that the rate cut would take place in the near future but did not specify a date.

Initial reaction to the proposal was less than enthusiastic.

“Most laborers do not like late working hours. Performance quality is also lower in night-hour production,” Sofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), said on Sunday.

Only a small portion of industries in Indonesia would benefit from the change, he said.

“Ten to 20 percent of industries operate in three shifts, such as petrochemicals, metals and some textile factories. Only those will benefit from this structure,” he said.

PLN has been under pressure to bring down its operational costs. The government ordered it last month to stop using diesel to fuel its power plants and switch to cheaper coal or natural gas, but it has blamed a lack of infrastructure for gas distribution for its continued reliance on more expensive diesel.

The utility has also received rebukes from lawmakers in the House of Representatives when Energy Minister Darwin Zahedi Saleh suggested this month that PLN would need greater electricity subsidies to deal with high coal prices and shrinking gas supplies.

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