House wraps up debates, ready to approve power law

Johannes Simbolon, The Jakarta Post, Jakarta

After a debate lasting one-and-a-half years, legislators and the government have eventually reached agreement on the final draft of the electricity bill, which is scheduled to be endorsed during a plenary session next week.

Agusman Effendi of the Golkar party, who is the head of the House of Representatives' committee deliberating the electricity bill, told The Jakarta Post on Friday that his committee and the government's team had finalized their discussions on the bill on Thursday and that the House was scheduled to hold a plenary session next Wednesday to endorse the bill.

"All the major points of the bill have been agreed upon. We now need only to synchronize the material in the bill in the days ahead of the plenary session," Agusman said.

The government submitted the power bill to the House in early 2001, but the House did not start its deliberations for another couple of months.

The initial version of the bill sparked protests from many members of the public, including the workers of public power utility PT PLN, given its goal of liberalizing the country's power industry and stripping PLN off its decades-long monopoly over the power sector. With the enactment of a new power law, the government is seeking to lure investors into the country.

Critics fear that liberalization will result in a sharp increase in power prices, thus hurting consumers.

They have demanded that the government keep the current system unchanged, in which the power price is controlled by the government and only PLN is authorized to sell power to the public. Independent power producers can only sell power to PLN.

Agusman said he believed the final text of the bill would satisfy both investors and the members of the public who protested the initial version proposed by the government.

Under the final version of the bill, Agusman said, the government would maintain the current PLN-monopoly system in less-developed areas for years to come, while in developed areas such as Java and Bali, liberalization would be implemented gradually starting five years after the enactment of the law.

One year after the enactment of the law, the government would set up a special authority tasked with supervising competition in sector.

When an area was fully liberalized, Agusman said, any private company would be allowed to generate power and sell their power directly to the public. They would also be allowed to set up their own distribution and transmission networks in cooperation with the government or use the state-owned network now operated by PLN to supply their power.

"The distribution and transmission network is considered a natural monopoly and must be owned by the state. Any company is free to use the network for a fee," Agusman said, adding that the power grid now operated by PLN might be transferred by the government to another state company during the competition era.

Agusman also said that in line with the spirit of decentralization, regional governments would be allowed to issue licenses for private companies to generate power in their respective areas and build their own networks.

Energy expert Kurtubi, a strong critic of the bill, said he was "surprised" upon learning that the House would approve the bill, saying the government had pressed the House to quickly approve it. The government, in turn, was under pressure from the Asian Development Bank (ADB) to quickly get House approval for the bill, he said, without elaborating on the ADB's reasons for pressuring the government.

"Many countries in Europe and many states in the United States have delayed liberalizing their power sectors for fear of a sharp increase in power prices.

"Thus, why should Indonesia be in such a haste to liberalize its power sector?" he said.