Successful Struggle v.s. Successful Struggle v.s. Indonesia’s Electricity Privatization Indonesia’s Electricity Privatization

LawLaw

Ahmad DaryokoAhmad DaryokoPresident of PLN UnionPresident of PLN Union

Kyoto – JapanKyoto – Japan May 6, 2007May 6, 2007

PLN (Perusahaan Listrik Negara = State Own Electricity) union facing toward the electricity power sector law on 2004. Accompanying its to constitutional court.

The constitutional court abrogating the law at 15 December 2004 by means of the consideration below :

Vertical Unbundling System (for Java), etc.

THE REPUBLIC OF INDONESIATHE REPUBLIC OF INDONESIA

THE LAW OF THE REPUBLIC OF THE LAW OF THE REPUBLIC OF INDONESIAINDONESIA

NUMBER 20 OF 2002NUMBER 20 OF 2002

CONCERNINGCONCERNING

ELECTRICITYELECTRICITY

ELECTRICITY VENTURESELECTRICITY VENTURES

Part OnePart OneType of VenturesType of Ventures

Article 8Article 8(1) Electricity Ventures shall consist of electricity supply

venture and electricity supporting venture.

(2) Electricity Supply Venture as referred to in paragraph (1) shall include the following types of venture: a. Electricity Generation;b. Electricity Transmission; c. Electricity Distribution;d. Electricity Sales;e. Electricity Sales Agent;f. Electricity Market Operator; andg. Electricity System Operator.

Article 16Article 16

Electricity Supply Ventures as referred to in Article 8 paragraph (2) shall be undertaken separately by different Enterprises.

Article 17Article 17

(1) Electricity Generation Ventures as referred to in Article 8 paragraph (2) letter a shall be undertaken on a competitive basis.

(2) Enterprises engaging in electricity generation in a region applying competition shall be prohibited from dominating the market hereunder.

Article 18Article 18

(1) An Electricity Transmission Venture as referred to in Article 8 paragraph (2) shall not be subject to competition.

(2) An Electricity Transmission Venture connected to a National Transmission Grid shall be open in nature and shall give equal treatment to Electricity Generation Enterprises.

Article 19Article 19

(1) An Electricity Distribution Venture as referred to in Article 8 paragraph (2) shall not be subject to competition.

(2) An Electricity Distribution Venture shall be open in nature and shall give equal treatment to Electricity Sales Enterprises and Electricity Sales Agents.

Vertical unbundling carry out the system into adverse condition caused by :

Business process between ventures.Tariff increase due to the business process

(Especially Taxes).

The Indonesian Illustration The Indonesian Illustration Electricity Financial SystemElectricity Financial System

Almost electricity revenue is from Java Island.• Total Revenue as 2006 financial report

= US$ 7.9 billion

Consist : - Java revenue = US$ 7 billion

- Out of Java = US$ 0.9 billion

Its describe that the Java Island has been matured.

• Total Deficit = US$ 1.3 billion

Almost deficit coming from outer part of Java System.

• It mention that the cross subsidize system would be taken place for outer part of Java

The power sector constitution would be The power sector constitution would be eliminated Java – out of Java cross eliminated Java – out of Java cross

subsidize :subsidize :

– The Tariff could be increase for outer Java.

– Increasing the people poverty.

ConclusionConclusion The Electricity Privatization Side Effects :

• Emphasis for almost people of Indonesia due to its tariff increase.

• Eliminating the cross subsidize between Java and out of Java.

The Constitutional Court considered that all electricity power restructuring as mentioned on Electricity Law number 20/ 2002 has been contradicted with the Indonesian Constitutional so by December 15th , 2004 The Electricity Law has been abrogated.

Thank You Thank You andand

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