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