Campaign vs Electricity Privatisation in Indonesia

PUBLIC SERVICES INTERNATIONAL RESEARCH UNIT (www.psiru.org)
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Energy unions in Indonesia have been active in campaign anti-liberalization of electricity since 2002. Their first success was the annulment of Electricity Act 2002. The campaign was not only focused on keeping electricity tariffs low but also on improving the quality of workers in energy companies. Over the years, the government tried to submit new drafts of electricity act to Indonesian parliament but Unions campaigned against this. In 2004-2009, unions had marched to government office every time hey hear any effort from government to push for a new electricity law. This situation has not changed until November 2009 when legislators approved the new Electricity Bill no 30 year 2009.

This bill passed exactly when Indonesia was facing electricity crisis in several main cities. The growth of the economy had caused increasing demand for electricity while the development of new power plants had not met the expectation. In addition, the lack of facilities' maintenance because of management efficiency strategy affected reliability of power plants and its infrastructure. For instance, two power storage in Jakarta were busted in April and took a month to fix. As a consequence, some cities and districts experienced blackouts for long hours while the maintenance of the facility was carried out by the state-owned electricity company (PLN). This had triggered protests from public which went from peaceful rally to destructive one.

The electricity deficit crisis has formed public opinion which agrees with the idea to reduce the monopoly of PLN in electricity business. Public saw the main causes of the crisis was the in-competitiveness of PLN company because of its monopoly history. It was met with mass psychology that needed a quick solution over their problems. The PLN shall step aside and let private independent power producers (IPPs) invest in Indonesia. This solution may create competitiveness that lead to efficiency. The public is not aware that the problem of supposed inefficiency in PLN is due to the lack of primary energy sources to PLN, e.g. gas and coal. Only a few from media would investigate and were concerned with this fact. This discussion met with articles in the draft of Electricity Bill no 30 year 2009. The private sector can invest in various facilities of electricity infrastructure such as production, transmission, distribution etc. The bill also says the electricity tariff will not the local municipal and Regional/District Legislators who will be setting up the electricity tariff. The tariff will not apply national but regionally.

The energy unions had carried out many activities to prevent the approval of the draft electricity bill. During election period in September 2009, unions signed political contracts with legislators and presidential candidates. The contracts demanded political leaders to have a commitment not to privatize State-Own Enterprises and provide electricity to the people. The contracts has made other candidates do similar actions. They organized serial meetings with Students Associations, Farmers, Non-Governmental Organizations and Political National Leaders. Output of this campaigning and advocacy are three (3) important support networks. First is federation of State-Owned Strategic Enterprises. It consist of SOEs such as State Oil Company, Telecommunication company and steel industry. Second is Alcatraz, Alliance of People Anti-Privatization. It consists of NGO and unions that support anti-privatization movement and last one is a networking with religious organizations. Mostly religious organizations have basis in rural area and they are not reached yet by any electricity transmission.

Prior to legalization process in parliament, energy unions intensified their campaign and lobby to legislators. One political party, Indonesia's Democratic Party Struggle (PDI-P), had given its statement to oppose the bill while other parties did not have any opinion or support it. However, without any support from others, PDI-P's support was nothing. On 9 of November 2009, legislators passed the law and it was effective since 18 December 2009.

The final step to avoid the implementation of the bill is by filing a judicial review of the electricity bill no 30 year 2009 to Constitutional Court. The court will examine whether the law is violating the State Constitution or not. This effort was successfully five years ago and unions want try it again.

Last 25 March 2009, experts on electricity issue from Public Services International Research Unit (David Hall) and the Philippines (Luis Corral) gave testimonies at the Constitutional Court. Unions expect that facts and opinion presented by experts will convince the judges that electricity privatization will not bring any good to Indonesia citizens.