Govt to Save Rp22 Trillion if Electricity Subsidy Scrapped, Says Official

TEMPO.CO, Jakarta - The Indonesian government stands to save Rp22.12 trillion in state spending if it scraps the electricity subsidy for 15.2 million 450 VA customers, an official has said.

"With the number of (450 VA customers) reaching 15.2 million, the state spending that can be saved will be Rp22.12 trillion," director general of electricity at the Energy and Mineral Resources Ministry, Rida Mulyana, said during a meeting with the budget committee of the House of Representatives (DPR) in Jakarta recently.

The government is in the process of formulating an electricity subsidy scheme to be implemented in 2022, he informed.

The policy will refer to integrated data on social welfare from the Social Affairs Ministry and is based on the 2022 macroeconomic assumption, under which, economic growth is projected to reach 5.7 percent, inflation rate 3 percent, rupiah's exchange rate Rp14,450 per US dollar, and Indonesian crude price (ICP) US$50 per barrel, Mulyana said.

Unless the electricity subsidy scheme is revised, the state will spend Rp61.09 trillion, he pointed out.

"If the classification can be done, the electricity subsidy which previously reached Rp61.09 trillion could be kept down to Rp39 trillion," he added.

He said the plan to implement a new subsidy scheme should be disseminated widely to avoid public refusal such as in 2017.

“This (plan) needs dissemination because it involves a sizable amount," he explained.

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