Electricity Bill - Passed by the DPR

The House of Representatives (Dewan Perwakilan Rakyat / DPR) is picking up speed as it winds down for this parliamentary term. A raft of legislation has been passed. Amongst these is the Bill on Electricity (Rancangan Undang-undang Ketenagalistrikan / RUU Ketenagalistrikan). The bill comes into force once it is signed by the president and will repeal and replace Law No. 15 of 1985.

The bill came about after the Constitutional Court handed down a decision on 15 December 2004 which in effect ordered the government to draft and enact a new electricity law.

The primary difference between the new law and the old law is in who can supply electricity to the masses. Under Law No. 15 of 1985 the State Electricity Company (Perusahaan Listrik Negara (Persero) / PLN) enjoyed a monopoly over supply. This turned out to be an inefficient manner to supply electricity. The simple fact now is that it is expected more competition will see an increase in efficiency and ensure the development of the necessary infrastructure while simultaneously broadening the base of supply.

Those that can now be involved in the supply of electricity include the central and regional governments through state and regional owned enterprises, cooperatives, communities, and the private sector.

The bill also provides a greater role for regional and local governments to set appropriate regional or local tariffs for electricity. The private sector will not be able to set prices at any level, as the agreement of the government is generally required. This is the case for both the cost of the electricity itself and the leasing of any network. However, it must be noted that ultimately the central government will exert primary control of electricity resources.

It is expected that all implementing regulations required under the bill will be issued within 12 months of the enactment of the bill. It is then expected that regional and local governments can put into place the necessary pricing policies for the supply of electricity within their respective jurisdictions.

The bill includes both administrative and criminal sanctions. The criminal sanctions attract terms of imprisonment between 2 and 10 years and fines of between IDR 500 million and IDR 5 billion.

Finally, it is hoped that the new law will ensure that not only the level of electricity supply increases but that there is a simultaneous increase in the number of Indonesians who can enjoy that increased supply.