Govt proposes to form new state electricity firms

The government is proposing to establish other state electricity firms in order to create competition in the country?s electricity industry.

The proposal is included in the electricity bill on which the government and the House of Representatives have started deliberations.

The bill was proposed by the government following a rule by the Constitution Court in 2004 to annul the Electricity Law No. 20/2002 that gave the private sector the same right with state electricity firm PT PLN?s in providing power to the public. According to the Court, the law was in conflict with the nation?s 1945 Constitution which stipulates that industry sectors which affect the lives of all the public should be controlled by the state. The Court opined that electricity is one of such sectors.

?State firms will be prioritized in providing power, but there will more than one state firm. The formation (of new state electricity firms) will comply with the state owned firm law,? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday.

The ministry?s director general of electricity and energy use Yogo Pratomo said today some operations of PLN already held the same right with their holding company?s, including PLN?s operations in Tarahan and Batam. Yet, the government still treats them as PLN?s subsidiaries.

As part of the implementation of the proposed law, there could be more than one state firms which respectively handle power generation, transmission and distribution, which are all now operated by PLN.

Yogo said the nation?s constitution did not forbid competition among state firms.

?In line with the Constitution Court?s ruling, there must be competition (in the power industry). Competition among state firms is acceptable, but not with private firms. Thus, in the future there will be a competition among state firms, not with private firms,? Yogo said. (Godang)