House passes electricity bill into law

The House of Representatives passed on Tuesday the electricity bill into law, providing bigger opportunities for private sector to invest in the country?s power sector.

Of the 10 political factions in the House, only one, that is the PDI-Perjuangan faction, refused to endorse the bill, arguing the bill could lead to a domination of foreign companies in the country?s pivotal power sector and such a situation could threaten the nation?s sovereignty.

The bill was endorsed during a plenary session presided over by legislator Muhaimin Iskandar in the presence of Minister of Energy and Mineral Resources Purnomo Yusgiantoro representing President Susilo Bambang Yudhoyono.

The government proposed the bill after the liberal Electricity Law No. 20/2002 was annulled by the Constitution Court on Dec. 15, 2004, arguing the law contravened the nation?s Constitution that stipulates ?economic branches which are important for the country and have impacts on the lives of many people should remain under the control of the government?. The Constitutional Court considers electricity industry one of such ?economic branches?.

The ministry said in a press statement that the law aims among others to boost the supply of electricity in a more ?efficient, adequate, equitable, sustainable, reliable, secure and environmentally friendly way? as part of the efforts to promote the welfare of the people.

The main points of the new electricity law include:

1.The business of provision of electricity is controlled by the government. This is in line with Chapter 33 of the Constitution and the ruling by the Constitutional Court. The management of the industry is to be carried out by the central and regional governments.

2.The government serves as the regulator as well as a business player in the electricity sector. As a regulator, it holds the rights of making policies and regulations for, managing and supervising industry players. Through state owned companies, it also does the business of providing electricity.

3.Under the law, the electricity sector will be co-managed by the central, provincial, regency, mayoralty governments. The law specifies the rights and responsibilities of each government.

4.State owned companies hold the ?first right of refusal? in the provision of electricity for the public. They hold the first priority of meeting electricity demands in their operating areas. This rule complies with the ruling by the Constitutional Court stating that state owned companies should be prioritized in the electricity sector.

5.Private enterprises, cooperatives and self-reliant public organizations may participate in the provision of electricity for the public. The government will issue Electricity Provision Business Licenses to them.

6.The businesses of provision of electricity for the public include power generation, power transmission, power distribution and/or power sale. This division of power business comes in compliance with the ruling by the Constitutional Court and the law does not regulate the unbundling of state owned companies.

7.The selling price of power, power network lease fees and power tariffs will be regulated. Business players will determine their power selling prices and power network lease fees after getting approval from the central government or regional governments. Power tariff for consumers will be determined by the central government after being approved by the House of Representatives or by the regional governments after being approved by regional legislatures. The government regulates subsidy for consumers. (Bodega)