Govt issues regulation on power

Leony Aurora, The Jakarta Post, Jakarta

To give investors a legal basis for contracts in electricity projects, the government has issued a government regulation on the power sector.

"We issued Government Regulation No. 3/2005, last night," said Minister of Energy and Mineral Resources Purnomo Yusgiantoro on the sidelines of the Indogas 2005 conference held here on Monday.

The regulation supports Law No. 15/1985 on electricity, which was reenacted late last year following a ruling by the Constitutional Court which annulled Law No. 20/2002 on electricity.

The 2002 electricity law stipulated the phasing out of the role of state power firm PT Perusahaan Listrik Negara (PLN), and allowed a greater role for private companies in providing power to the domestic market.

The court said that liberalization of the sector was against Article 33 of the 1945 Constitution, which stipulates that economic sectors important to the state and crucial for the welfare of the people shall be controlled by the state and must be developed for the maximum benefit to the people.

Purnomo said the new regulation was based on the 1885 law on electricity. "If the private (sector) wants to do electricity projects, it has to be in partnership with PLN," said Purnomo.

Companies generating power for their own use or those using renewable energy can set up the plants independently, without having to partner with PLN.

"But, their power output have to be sold to PLN," said Purnomo further.

The government has said the new government ruling would take effect until the government finalized and submitted an amendment to the law to the House of Representatives, which is expected to take place later this month.

Coordinating Minister for the Economy Aburizal Bakrie has said that the revised law would stipulate that investors would be able to invest in power plant development, but could not sell and distribute power directly to consumers.