Govt to propose new power law
Dadan Wijaksana, The Jakarta Post, Jakarta
The government, in response to the Constitutional Court's annulling Electricity Law No. 20/2002, said it would draft a new law that would take a "softer" approach to liberalizing the power sector.
The new draft law is expected to be completed for submission to the House of Representatives in early January, Director General of Electricity and Energy Utilization Yogo Pratomo at the energy ministry said on Thursday.
"The reasons for annulling the law concern only a few articles, so I do not think it would take long to revise or modify (the law). We hope to submit it (to the House) by the middle of next month," Yogo told a press conference. "...The spirit (of liberalization) of those articles may have to be toned down a bit, to accommodate as many interests as possible."
He did not elaborate, and said only that the matter would be discussed further in the drafting process.
The Electricity Law, endorsed by the House in 2002, aims at a gradual liberalization of the power sector, which has been monopolized for decades by state electricity firm PT PLN.
The law states that, starting in 2007, private companies may produce and sell power to the public in Java, Bali and Madura.
Only three articles -- Articles 16, 17 and 68 -- contain stipulations on liberalizing the power sector.
The Constitutional Court ruled on Wednesday that the law be annulled, arguing that electricity was a commodity vital to the lives of many citizens and should therefore remain under government control. In addition, the court reinstated the defunct Electricity Law No. 15/1985.
The court reviewed the case upon complaints filed on behalf of PLN workers by non-governmental organizations (NGOs) and labor unions, which claimed the law would lead to layoffs and higher electricity rates for consumers.
Meanwhile, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government needed to focus on revising the three articles as soon as possible, so as not to cause any confusion among existing and potential investors.
"(A prompt revision) is important in sending a sign to investors that the government is committed to inviting them to develop our power sector," Purnomo said.
"As we said earlier, of the US$30 billion or so needed to develop the sector, $20 billion is expected to come from the private sector," he added.
Meanwhile, Yogo said several investors had already voiced their concerns over the court's decision.
"We have received questions from certain investors, including those from Germany and Japan, on the issue. To be honest, this (annulment) has the potential to derail investor confidence about legal certainty here," Yogo said.
Separately, PLN president Eddie Widiono said the annulment would not affect its current contracts.
"PLN is still studying its impact, but our tentative conclusion is that it will not have a negative effect on our existing power purchase contracts and will not lead to their renegotiation," he said.