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Power Rate Increase Cancelled

President Calls Off Planned 6% Hike in Electrical Tariffs Scheduled for October 1, 2003.

(10/6/2003) President Megawati Soekarnoputri has signed an official decree withdrawing an earlier decision that would have allowed the State Power Company (PLN) to introduce increases in the per kilowatt price paid by consumer every quarter through 2005.

PLN had lobbied the government seeking permission to bring the electrical tariff charged to the public to 7 U.S. cents per kilowatt hour, a level deemed economically viable for profitable operation of the power system. The current tariff of Rp. 574 per kilowatt hour (6.79 U.S. cents) is near that target, aided by the gradual strengthening of the Indonesian Rupiah against the U.S. dollar over the past several months.

PLN officials expressed guarded optimism that should the Rupiah continue to strengthen over the short to medium term, further hikes planned for introduction in 2004 might be avoided.

The savings represented in the decision to cancel the planned hike in power rates is welcome news to Bali's Hotel Industry still struggling to return to profitable levels of business.