Free competition in power sector will begin in Batam, Java, Bali<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government will begin liberalizing the country's power
\nsector in 2007, with Batam, Java and Bali expected to be the
\nfirst areas to introduce free-market competition.<\/p>\n
\"We hope (the liberalization) will start in 2007 at the
\nlatest,\" Minister of Energy and Mineral Resources Purnomo
\nYusgiantoro said on Thursday.<\/p>\n
Purnomo said the government would tread carefully in
\nliberalizing the power sector, and would only open up the market
\nin those areas ready for the competition.<\/p>\n
The government believes the industrial island of Batam will be
\nready to implement free-market competition in five years time,
\npointing to the fact that power prices in Batam are already
\nhigher than in other areas of the country.<\/p>\n
\"Java and Bali will also probably be ready to implement the
\nfree competition,\" Purnomo was quoted by Antara as saying.<\/p>\n
In less developed areas of the country, the government will
\ncontinue providing subsidies for power consumers, determining
\npower prices until the areas are developed enough for open
\ncompetition.<\/p>\n
The House of Representatives passed a new power bill into law
\nlast week, after more than one and a half years of deliberation.<\/p>\n
Under the new law, expected to be approved by President
\nMegawati Soekarnoputri later this month, the government will
\nstrip state electricity company PT PLN of its four decade-long
\nmonopoly of the power sector.<\/p>\n
The new law will allow private companies to produce power and
\nsell it to the public.<\/p>\n
Under the current system, only PLN is authorized to sell power
\nto the public. Private companies are allowed to produce power,
\nbut they are only able to use the power themselves or sell it to
\nPLN.<\/p>\n
At least one year after the new law takes effect, the
\ngovernment is required to set up a special agency -- called the
\nPower Market Supervisory Body -- to supervise the competition in
\nthe power sector.<\/p>\n
And five years after the new law takes effect, the government
\nis required to have selected one area for the implementation of
\nfree-market competition.<\/p>\n
The law says that while the power generation and power
\nmarketing sectors will be opened for competition, the government
\nwill continue to control the power transmission and distribution
\nnetwork. However, any company will be free to use the network for
\na fee.<\/p>\n
The minister said the transmission and distribution network
\nwould be operated by a state company.<\/p>\n
A number of different parties campaigned against the law,
\nsaying open competition would result in a sharp increase in power
\nprices, which has occurred in many countries.<\/p>\n
But Purnomo said the competition would encourage more
\ninvestment in the power sector, and power producers would vie to
\nprovide the best service to customers. And investors, he added,
\nwill be attracted to those regions with abundant supplies of
\npower.<\/p>\n
There have been numerous blackouts around the country over the
\npast two years, and there are worries that the situation will
\nworsen in the coming years unless the government is able to
\nattract more investment in the power sector.<\/p>\n
The government has said power demand on the islands of Java
\nand Bali alone could exceed the supply by 2003, when the peak
\nload is expected to hit 15,441 MW compared with an installed
\ncapacity of 15,285 MW.<\/p>\n
Indonesia needs about US$28.45 billion in new investment over
\nthe next 10 years to build new power plants and a power network
\nto stave off a power crisis in Java, Bali and other parts of the
\ncountry, according to the government.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/free-competition-in-power-sector-will-begin-in-batam-java-bali-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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