Electricity liberalization will cover only downstream operation

The government and members of the House of Representatives have agreed that the liberalization in the electricity sector would be limited only to upstream operation such as power generation activities, while transmission and distribution operations would remain under the control of the state-owned electricity company PLN.

The agreement was made during a working meeting on the electricity bill between House members and government?s representatives including Minister of Energy and Mineral Resources Purnomo Yusgiantoro on Thursday.

Agusman Effendi, the chairman of the House?s Commission VIII, who led the meeting, said that the free competition in the upstream operation as stated in the proposed law would be implemented in certain regions, particularly those which have economically and socially been prepared such as Java and Bali

"But provinces will have the authority to carry out their electricity program in order to speed up the process of electricity in the country," he said.

Meanwhile Director for Electricity Development at the Ministry of Energy and Mineral Resources, J. Purwono, said that the free competition in the power generation would be initially introduced in Java and Bali during the first years of the implementation of the law. "It will be then implemented in Sumatra," he said.

According to him, although the free competition will cover only the upstream operation, the downstream operation such as distribution and transmission will be partially opened to private sectors. "The law adopts multi-sellers and multi-buyers principle," he said. "But independent power operators will be allowed only to sell directly their power to certain groups of buyers such as corporate customers," he said.

He said that the sales and distribution of electricity to the public will still be controlled by PLN. (*)