Govt Proposes Rp19.97tn Incentives for Electricity Investment

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  • Pembangkit Listrik . AP/Irwin Fedriansyah

    Pembangkit Listrik . AP/Irwin Fedriansyah

    TEMPO.CO, JakartaThe government has proposed investment incentives of Rp19.97 trillion in the draft 2015 state budget to develop the electricity system, as reported by Antara News.

    The incentive is equal to a business margin of 7 percent, Director General of Electricity at the Energy and Mineral Resources Ministry Jarman reported.

    "The business margin which was previously based on a certain percentage of costs is changed into investment incentives which are set at a certain rate," he said.

    Under the cost percentage-based business margin scheme, if the cost increases, the business margin will go up accordingly, he said.

    "However, investment incentives, which have already been established, cannot be increased again. The more efficient the investment incentives are, the greater the profit will be," he noted.

    Investment incentives result from a change in subsidy scheme from cost-plus margin to performance-based regulation, which separates operating cost from investment, he said.

    The performance-based regulation scheme will be implemented with effect from 2015, he said.

    President director of state electricity company PT PLN (Persero) Nur Pamudji stated that the performance-based regulation scheme is better than cost-plus margin scheme.

    With the performance-based regulation scheme, PLN can separate variables it can control and cannot control.