SMERU’s Responses to Electricity Relief Policy (Regulation in Lieu of Law No. 1/2020)

16 April 2021

SMERU’s responses to free electricity and discounts (Regulation in Lieu of Law, or Perppu, No.1/2020): The policy has not reached the people who need the assistance and has the potential for wasteful consumption of electricity.

The government has decreed that 24 million 450VA electricity customers are exempted from paying the electricity bill for 3 months, while seven million 900VA electricity customers are given 50% discounts. SMERU believes that the waiver and discounts already target poorer households and indirectly ease their household expenses. There are, however, some notes regarding the policy.

The 2018 PLN statistics show that the number of class-1 industry customers (I-1) and class-1 business (B-1) reached three million and the number of households using 900VA (R-1) reached 22 million in 2019. From the data, we can conclude that out of the 25 million customers from the lower-middle income groups, only seven million customers have already received assistance. This means that 18 million customers (households, formal workers, and MSEs) have not enjoyed the benefit of the policy despite the fact that they are also affected by the pandemic.

SMERU’s recommendation: The government needs to expand the program’s coverage by including R-1, I-1, and B-1 customers with power limit of 900V.

Related to the scheme to waive and discount the electricity bill, we are of the opinion that this policy has the potential for wasteful consumption of electricity.

SMERU’s recommendations:

  • The government needs to revise the scheme and turn it into a predetermined electricity relief. For the postpaid customers, the electricity bill will be deducted based on the predetermined amount.
  • For the prepaid customers, the assistance can come in the form of electricity credit of a certain amount and can be used up. With this scheme, the potential for a wasteful consumption of energy can be controlled.

To close, we also suggest that the government change the terms electricity bill waiver and discount to temporary electricity subsidy (subsidi listrik sementara/SLS) to avoid misperception. With the right scheme, the SLS policy can target three groups at once, namely households, informal workers, and MSEs, and ease their burden of expenses during the COVID-19 pandemic. Especially for households and informal workers, they can be more flexible in allocating their “financial resources” for primary needs, such as foods. For MSEs, they can cut down on the operational costs whilst remaining productive so that they can avoid going under.

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SMERU's blog posts reflect the views of the authors and do not necessarily represent the views of the organization or its funders.