When wealth "trickles up"

When wealth "trickles up"

The World Bank country director for Indonesia was recently reported in The Jakarta Post as saying that electricity and fuel subsidies must be accepted if there is to be enough money for such essentials as education. This would be a fair point if it weren't for the fact that upwards of US$150 billion is leaking from Indonesia's power sector to Independent Power Producers under the terms of imprudent privatization deals of the 1990s and the litigation that is unfolding as a consequence in European courts.

On top of this, around a third of all power generated in Indonesia is wasted and many of the power plants that were so expensive to build and keep, weren't necessary in the first place. These amounts dwarf the two or three billion in loans the World Bank might dispense at this-weeks' CGI meeting in Bali, ironically enough on the condition of further fuel and power price hikes rather than a genuine and comprehensive overhaul of the energy sector.

Subsidy reform and sectoral restructuring is essential for Indonesia to attain an energy policy that protects the broader public interest and promotes rural development, long-term national autonomy and sustainable natural resource and environmental management.

But energy subsidy reform and privatization on their own can't solve the myriad budgetary problems that result from what remain at best opaque policy processes. Each year, the World Bank and IMF tell Indonesians, through their government, that they must sustain price hikes for their own good and that of the nation. But until they can be sure that this time the policy advice is good and that their sacrifice is actually going to serve a purpose, people are surely quite right to object.

OPHELIA COWELL, Energy Research Coordinator, The Transnational Institute, Denpasar, Bali