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