New Electricity Law will hurt customers: Analysts

Analysts and the labor organization at the state owned electricity PLN have called on members of the House of Representatives to oppose the proposed electricity law, saying the liberalization as stated in the law would hurt customers, Media Indonesia reported on Tuesday.

Energy analyst Kurtubi said in Jakarta on Monday that the liberalization system in the proposed electricity law would result in new taxes which would in turn hurt customers as the end users of the electricity. "If the law is passed, the price of electricity could reach US$0.07/kWh. It will burden customers especially if there is no guarantee the new law will result in an increase in the supply," he said.

He warned that as electricity covers all lives of the people, it should remain under the monopoly of the government. "If the electricity bill is approved, all related activities such as power generation, transmission and distribution could change hands to many parties. It will cause overplayed," he added.

According to him, the liberalization of the electricity would not guarantee sufficient supply. He said Indonesia should take a lesson from the electricity problem in California. According to him, the American State has taken a liberalization program in order to increase supply, but the result was far from expected. The liberalization only caused a five-fold increase in electricity tariff while the electricity crisis continued.

Meanwhile the secretary general of PLN labor union, Ahmad Daryoko, said in Jakarta that the workers also protested the introduction of the new law. Besides hurting the customers, the privatization resulted from the introduction of the new law would massive layoffs.

"If the country?s electricity sector is controlled by foreign companies, they will be able to steer the government," he said after a meeting with the People?s Advisory Assembly (MPR) Amien Rais.

Unlike Kartubi, Pande Silalahi, a member of the anti-monopoly commission, supported the free competition principle in the new electricity law. "Why should we feel haunted with the new law. Such fears are exaggerated," he said.

According to him, the privatization will invited more players in the electricity sector and this will cause tariff war, which will in turn benefit the customers.

Director General of Energy at the Ministry of Energy and Mineral Resources Luluk Sumiarso told Koran Tempo that the privatization program would be introduced only in Java and Bali, and would be limited only to upstream operations, while transmission and distribution activities would remain under the government?s control.

"If the law is approved, the law will open wider opportunities to private companies to enter the power generation activities," he said, adding that the proposed law was initial scheduled for approval this week but it was delayed until next month. (*)