Electricity unions in Indonesia reject Omnibus law that could lead to privatization of the sector

Energy sector Electricity unions in Indonesia reject Omnibus law that could lead to privatization of the sector

Approximately 74 journalists/media practitioners and leaders of five Indonesian unions in the energy sector came together for a virtual Press Conference held on 9 July 2020. Unions strongly rejected the controversial Omnibus Law Employment Creation draft Bill, over potential reductions in their rights, remuneration and job security, among other points.

Indah Budiarti

“Unions in the electricity sector have strongly rejected the Omnibus Law Employment Creation draft Bill,” said General Secretary of Persatuan Pegawai PT Indonesia Power, Andy Wijaya, in a virtual Press Conference held on 9 July 2020. Around 74 journalists/media practitioners and leaders of the five unions (SP PLN Persero, PP Indonesia Power, SP PJB, SPEE FSPMI, and Serbuk Indonesia) joined the online conference. Spare-headed by Bro Muhammad Abrar Ali, General Chairman of the SP PLN Persero, union leaders gathered at the SP PLN Persero office for the event.

The unions reject the Omnibus Law Employment Creation Draft Bill because of problems in the draft, especially in the electricity sub-cluster. Andy added that the draft changed 35 articles in Law No. 30 of 2009 on Electricity. Whereas some of the articles have been canceled by Constitutional Court Decision.

“Ironically, the formation of Omnibus Law Employment Creation Draft Bill did not use The Constitutional Court Decision MK No. 111/PUU-XIII/2015, but used Law No. 30 of 2009 on Electricity instead,” said Andy.

“It can be said that the legislator has revived the zombie articles and then put those articles into the Omnibus Law Employment Creation Draft Bill and that is unconstitutional,” he asserted.

The Omnibus law Employment Creation Draft Bill removes the parliament’s right to determine the electricity rate for consumers

Andy gave an example of a revived article. Article 10 paragraph (2) of Law No. 30 of 2009 on Electricity said that electricity provision business for public as stated in article (1) can be done in an integrated way. The Constitutional Court said that the article has conditions and does not have binding legal force if it is interpreted as justified unbundling practices in electricity provision business for public that it removes the control of the state as in the principle of “controlled by the state”.

Another problem is that the definition of “operational permit” is gone as well as the definition of “electricity provision business permit.” Both definitions are then integrated into one, i.e. “business permit related to electricity”. This implies that the permit for electricity provision for public and not public, i.e. private interests, are integral and are the same.

As well as with the definition of “business area”; i.e. areas that are designated by the government to be the areas of operation of distribution business and/or electricity sale for business entity to do their electricity provision business. Omnibus Law Employment Creation Draft Bill defines “business area” as the areas that is designated by the government as areas for entities to do their distribution and/or electricity sale.”

By removing the “to do their electricity provision business” and changing it into “distribution and or electricity sale” then the definition of “business area” in the Omnibus Law Employment Creation Draft Bill implies that power plants do not need permit from the government. It means that everybody capable of building a power plant and doing electricity transmission is free to do so.

“The result will be that Indonesia will have an oversupply of electricity and the oversupply will be charged to the people and finally the electricity rate will hike,” he assessed. Andy also said that the government needs to pay more attention to the fuel needed by PLN power plants. The increase of fuel price could increase the basic production cost (BPP) of electricity so that it will fall on the people’s shoulders.

Another problem is that the Omnibus law Employment Creation Draft Bill also removes parliament’s rights to determine National Electricity General Plan (RUKN). It is very important that RUKN be discussed at parliament as it can have an impact on the end users of the electricity system, namely the community. So to avoid that the RUKN produced does not harm the people, it is important to include the House of Representatives (DPR).

In addition, the Omnibus law Employment Creation Draft Bill removes the parliament’s right to determine the electricity rate for consumers. Therefore, the government will set the electricity rate exclusively without having to get the parliament’s approval. If this article is passed, then in the future, electricity provision business entities can force the government to increase electricity rate for consumers.

“We also note that the Omnibus Law Employment Creation Draft Bill, electricity sub-cluster causes so many electricity related regulations to be decided by the government only, without consultation with parliament. Therefore, there will be no control from the representatives,” said Andy.

Responding to what Andy said, General Chairman of the SP PLN Persero, Muhammad Abrar Ali agreed with him. Abrar reminded that this might lead to the liberalisation of electricity in Indonesia.

This law legitimates environmental destruction, ignores people’s investment and indigenous people who are more environmentally friendly and sustainable.

“I see that the Omnibus Law Employment Creation Draft Bill, sub-cluster electricity has removed the legislative function of the parliament, especially in doing monitoring. The legislative function is related to interpellation right, inquiry right, and the right to express opinion in order to ensure the government will not abuse its authority in governing the electricity,” said Abrar.

“Electricity is a nation’s strategic asset. It is not just a matter of economy, but also defense,” he added.

Abrar gave an example. A case of a blackout in Nias Islands. The impact of the blackout was that the internet was paralyzed, even the defense system was disturbed. What if we were under contract with other parties? It would be very dangerous. Therefore, we remind the house of representatives in doing its function of legislative, please don’t do it in a reckless way and do not pass the draft hastily.”

Meanwhile, the Section head of Campaign and Network of YLBHI, Arip Yogiawan, said that the Omnibus Law Employment Creation Draft Bill is rejected by different groups of civil society. In his explanation, he said there were at least twelve reasons why civil society rejected the Omnibus Law:

  1. This law legitimates environmental destruction, ignores people’s investment and indigenous people who are more environmentally friendly and sustainable.

  2. The making of this law is unprocedural as it was done in a closed manner and without civil society participation and only recycling unconstitutional articles.

  3. Omnibus Law task force consists of elites without civil society elements whatsoever, including people who are impacted by the law

  4. Authority centralism on national government which hurts the spirit of reformation

  5. There is a big slot for corruption to thrive as a result of a narrowed down monitoring mechanism and the removal of people’s legal standing

  6. People’s life space expropriation and destruction

  7. Acceleration of environmental crisis as a result of investment. Environmental pollution, ecological disaster (man made disaster), and environmental destruction.

  8. Modern slavery through flexibilisation of labour i.e cheap labour, paying wage under minimum wage, hourly wage and the use of contract employment and outsourcing.

  9. Mass lay off and worsening of working conditions

  10. Education system orientation for creating cheap labour

  11. Peasant, fisherman, indigenous people, women and children, disabled and minority beliefs groups, gender and sexual impoverishment

  12. Criminalization, repression and violence by the state to its peoples while the state gives freedom and privilege of immunity to business

    Video of the Press Conference

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