The Indonesian Employers Association (Apindo) demanded no price-setting policy for privately generated electricity to foster investment and help end blackouts.
Apindo chairman Sofjan Wanandi said that investors had been deterred from putting money in the electricity business because they had to comply with the maximum tariff set by the state power utility PT Perusahaan Listrik Negara (PLN).
"There are a lot of people who want to invest in the electricity business. But if *the government* sets the price so low and other countries, such as India, offers better pricing, no one would want to invest here," he told The Jakarta Post on the sidelines of a hearing with the House of Representatives' Commission VI overseeing trade, business and state enterprises on Wednesday.
PLN has long dominated the industry as the sole power provider to the national grid. Its position is now being challenged with the newly enacted electricity law, which will allow private firms to participate in the electricity business, both for power generation and distribution.
Under the new law, private power producers can sell directly to consumers without having to sell first to PLN. The law will also allow different pricing between regions.
Sofjan said PLN's power monopoly was becoming untenable.
"*PLN* has become unreliable," he said, referring to the blackouts that have plagued the capital for the past few weeks or so. The blackouts have now begun to take a toll on business productivity.
Nina Tursinah from Apindo said that the small and medium enterprises were among those which had been hard hit by the blackouts.
"They don't have a fixed schedule on production, so when the blackouts occur, they have to halt everything," she said.
With private power producers competing in the sector, Sofjan said, PLN would have to perform better.
"Just look at *state telecommunication company* PT Telkom. It is now performing much better after the sector was opened for private players; the phone tariff is now very low," he said
Commission member Aria Bima, said privatization was not the answer to PLN's lack of management.
"I agree that PLN is inefficient, and to address this problem, there needs to be a reform, not a competition," he told The Post.
"If we don't set the price, no one will invest in providing electricity for Papua and other remote, undeveloped regions," he added. (adh)
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