Draft energy bill sparks controversy

Draft energy bill sparks controversy

Fitri Wulandari, The Jakarta Post, Jakarta

A controversial new bill that will integrate energy laws has
been drafted and the House of Representatives is keen to pass it
into law before its legislative term ends in September.

However, experts and energy activists have dismissed the
contents of the bill as "poor and over-simple", a reflection of
its hasty drafting. The bill did not properly address the issues
of sustainabilty and affordable public supply, they said.

House Commission VIII on energy deputy chairman Agusman
Effendy said passing the bill was urgent to prevent Indonesia
from turning into an energy importer in the future amid a
worrying decline in the country's primary energy resources, such
as crude oil, coal and natural gas.

"We need a policy to manage when to use different primary and
alternative energies," Agusman told The Jakarta Post at a two-day
workshop on the energy bill last week.

The workshop was organized by the commission to get outside
input on the bill.

Agusman said legislators expected to begin deliberating the
bill with the government when the House sat on Monday and pass
the bill in August. Members will end their legislative terms in
September and new legislators will start their terms in October.

He denied legislators had hastily drafted the bill, saying it
had been discussed for a year.

Three important energy laws -- on oil and gas, electricity and
geothermal laws -- were passed in 2001, 2002 and 2003
respectively.

The bill had principles to integrate these three laws, Agusman
said.

The government also shares legislators' worries about
depleting energy resources. It has projected the country's oil
reserves will dry up in 10 years if there are no new discoveries
during this period. Proven natural gas reserves of 90 trillion
cubic feet (TCF) are expected to be depleted in 30 years, while
coal reserves of 100 million tons would run out in 50 years.

At the same time, energy consumption climbs each year. Power
and fuel consumption grow by about 7 to 8 percent annually.

The draft bill seeks to manage and conserve non-renewable
energy resources -- oil, natural gas and coal -- and to promote
the use of renewable resources -- wind, solar power, water,
geothermal steam and biodiesel energy.

A clause in the bill requires power sellers to buy "a share of
power" from renewable energy-generated power plants in a bid to
promote wider use of such energy sources.

To promote energy conservation, incentives should be given to
producers and users of energy-saving equipment, the draft said.

Energy expert Kurtubi and activist Fabby Tumiwa agreed the
bill could provide a solution to the current situation where
there was no integrated policy in the energy sector dealing with
energy conservation issues.

The current kerosene and natural gas shortages suffered by the
public and domestic industries were problems arising from the
absence of an integrated energy policy, they said. This was
because most primary energy resources such as oil and natural gas
were exported.

However, the bill failed to set out clearly how to integrate
each energy sector into one management policy, they said.

"It lacks details about issues regarding energy utilization,
pricing, supply, exports and imports," Kurtubi told The Jakarta
Post over the weekend.

Like existing energy laws, the energy bill failed to address
the security of supply, Fabby, a coordinator of Working Group on
Power Sector Reform (WG-PSR) told the Post.

"There are no guarantees securing the energy supply, which
effects economic development, industry and the public," Fabby

Kurtubi and Fabby suggested the bill should put emphasis on
the efficient use of various energy resources rather than on
their sale for profits.

The bill must also ensure the public would be able to buy
energy at an affordable price, they said.

They warned legislators not to rush into deliberating the bill
as energy issues would affect the country's development during
the long term.

"The bill should be deliberated carefully, otherwise we will
be importing all our energy within 15 years," Fabby said.

Key points in the energy bill:

- Central and regional governments are obliged to provide energy
for domestic needs
- Energy provision can be carried out by state-owned enterprises
(SOEs), regional SOEs, cooperatives and small-medium enterprises,
private entities and individuals
- Power sellers must buy a certain amount of power from renewable
energy-generated power plants
- Energy prices are determined based on economic value
- The government provides a power subsidy for low-income people