Govt issues regulation on power

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.