A New Tax cut proposal by government for renewable energy producers

Currently, renewable energy producers generate electricity with average price of 15 US cent per kilowatt hour (kWh), which is much higher than the prices offered to households by state electricity company PLN at 8 cent per KWh.

To reduce the a renewable electricity prices, government propose a subsidy of  Rp. 1.3 trillion in the 2017 state budget. Unfortunately, the proposal was rejected by lawmakers. The Energy and Mineral Resources Ministry’s director for new and renewable energy, Maritje Hutapea, said that without a subsidy, the selling prices of electricity from renewable energy source would be too high.

Maritje said on Wednesday that “after the subsidy proposal was rejected, we have to find another way. A tax cut is the alternative but we must work with the Finance Ministry to achieve it”.

By the year 2025 government plan to cut down on carbon emissions and wean the country off fossil fuels. The aims is to supply 23 percent of nation’s energy from renewable sources.

In order to reach the target, renewable energy must make uup at least 11 percent of energy mix by 2017 or equal to 25.5 million ton of oil equivalent as stipulated on the General Plan for National Energy (RUEN).

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