Court annuls new electricity law<\/p>\n
Muninggar Sri Saraswati, The Jakarta Post, Jakarta<\/p>\n
The Constitutional Court annulled on Wednesday Electricity Law
\nNo. 20\/2002, ruling that it was against the nation's Constitution
\nfor opening the door to full competition in the electricity
\nbusiness.<\/p>\n
It was the first law to be annulled by the powerful court
\nsince its establishment last year.<\/p>\n
Court chief Jimly Asshidiqie, when announcing the court's
\nruling, said that since electricity was an important commodity
\npivotal to the lives of many people, electricity should remain
\nunder the government's control.<\/p>\n
This, Jimly said, was in accordance with Article 33 of the
\n1945 Constitution which says \"economic sectors which are
\nimportant to the state and crucial for the welfare of the people
\nare controlled by the state and must be developed to give the
\nmaximum benefit to the people.\"<\/p>\n
The Court reinstated the defunct Electricity Law No. 15\/1985
\nin a bid to maintain legal certainty following the annulment of
\nthe 2002 law.<\/p>\n
However, it maintained that any contracts made by the
\ngovernment under Law No. 20\/2002 prior to its annulment on
\nWednesday remained in effect.<\/p>\n
Jimly said that the nation's Constitution did not prohibit the
\nprivate sector from doing business in the power sector, but the
\ngovernment must keep control of the sector.<\/p>\n
\"The government must be the majority shareholder in state or
\nregional companies, which manage the sector... so it holds power
\nin decision making in the companies,\" Jimly said.<\/p>\n
The Court said private companies, national or foreign, may
\ncooperate with the state-owned enterprise to supply and generate
\npower for the public, by providing loans or setting up joint
\nventures. In the case of joint ventures, the state owned
\nenterprise must have majority shares of more than 50 percent or
\nrelative majority shares of less than 50 percent.<\/p>\n
Under the 2002 law, the government would gradually liberalize
\nthe power sector, starting in Java, Madura and Bali in 2007. By
\nthen, private companies may produce and sell power to the public
\nin those areas by themselves.<\/p>\n
The panel of nine justices said private companies were in a
\nbetter position than state electricity firm PLN to compete in the
\nsector given their better management, technology and finances.<\/p>\n
The court considered the law unfair toward PLN as it requires
\nPLN to fulfill the power needs of less developed areas outside
\nJava, Madura and Bali, while competing with private companies in
\nthe three developed islands.<\/p>\n
The judicial review of the law was raised with the court by
\nthe Indonesian Legal Counsel and Human Rights Association (APHI),
\nthe Indonesian Legal Aid and Human Rights Association (PBHI), the
\nPLN workers union, and the Association of PLN pensioners.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/court-annuls-new-electricity-law-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
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