House endorses power bill after long delay<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
After one-and-a-half years of deliberation, the House of
\nRepresentatives finally endorsed the electricity bill on
\nWednesday.<\/p>\n
The bill is expected to gradually liberalize the power sector
\nand attract more investment.<\/p>\n
All nine factions in the House endorsed the bill during a
\nplenary session, despite strong resistance from several members,
\nincluding outspoken legislator Hartono Mardjono who lodged a
\nprotest.<\/p>\n
In their final submissions, the factions said that the
\nliberalization drive would spur competition in the electricity
\nindustry, which in turn would allow the public to enjoy cheaper
\nelectricity.<\/p>\n
\"Competition will eventually lower the price of electricity,
\nand the public at large will benefit from the lower prices,\" said
\nTunggul Sirait from the National Awakening Faction.<\/p>\n
Meanwhile, Astrid Susanto from the Indonesian Nationhood
\nFaction (FKKI) said that the newly endorsed bill would attract
\nfresh investment to Indonesia.<\/p>\n
A huge amount of investment in the power sector is needed to
\navoid power shortages in the future.<\/p>\n
\"This bill will create legal certainty in the country's
\nelectricity sector,\" Astrid told lawmakers.<\/p>\n
Rustam Effendi Tamburaka from the Golkar Faction said that the
\nbill was not excessively liberal as many have claimed, pointing
\nout that the state-owned electricity utility PLN would still
\nmaintain its monopoly in less-developed areas.<\/p>\n
The government submitted the power bill to the House in early
\n2001, but the House did not start its deliberations for another
\ncouple of months.<\/p>\n
The initial version of the bill sparked protests from many
\nmembers of the public, including the workers of public power
\nutility PLN, given its goal of liberalizing the country's power
\nindustry and stripping PLN off its decades-long monopoly over the
\npower sector. Critics fear liberalization would result in a sharp
\nincrease in power prices, thus hurting consumers.<\/p>\n
They have demanded that the government maintain the current
\nsystem unchanged, in which the power price is controlled by the
\ngovernment and only PLN is authorized to sell power to the
\npublic. Independent power producers can only sell power to PLN.<\/p>\n
But the final version of the bill contains a number of changes
\nfrom the original version.<\/p>\n
In the final version, for instance, the government will
\nmaintain the current PLN-monopoly system in less-developed areas
\nfor years to come.<\/p>\n
Meanwhile, legislators also warned the government of the
\npossibility of a cartel being engineered by the private players
\nin the market. Through a cartel, the producers of goods or
\nservices can jointly act to force up prices at the expense of
\ncustomers.<\/p>\n
Tunggul said that the yet-to-be established electricity
\nregulatory commission must make sure that a cartel does not
\nemerge.<\/p>\n
Meanwhile, Muhamad Suhud, a coordinator for a grouping of non-
\ngovernmental organizations concerned with the power sector,
\nregretted the endorsement of the power bill.<\/p>\n
\"In a perfect competitive market, the new law would be of
\nbenefit.<\/p>\n
However, the Indonesian market is not perfect yet as supply is
\nnot able to meet demand,\" Suhud told The Jakarta Post.<\/p>\n
Suhud feared that liberalization would result in a sharp
\nincrease in power prices, thus hurting consumers.<\/p>\n
Highlights of newly endorsed electricity bill<\/p>\n
1. Within one year after the passage of the bill into law, the
\ngovernment will establish an electricity regulatory commission,
\nwhich will have the task of setting power prices prior to the
\nintroduction of free competition, and ensure fair prices under
\nfree competition.<\/p>\n
2. Within five years after the implementation of the law, the
\ngovernment will designate at least one area for free competition
\nwhere licensed private companies will be free to develop power
\nplants.<\/p>\n
3. Under free competition, all licensed companies will be free to
\ndevelop power plants and sell their power to the public by
\nthemselves or through agents.<\/p>\n
4. The government, through a state agency, will continue to
\ncontrol the power transmission and distribution network, which
\npower suppliers will be able to use for a fee.<\/p>\n
5. Local governments have the right to issue licenses to private
\ncompanies to set up power plants or sell power to the public in
\ntheir respective jurisdictions.<\/p>",
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