For many years, PSI affiliates in the energy sector in Indonesia have been successfully fighting against the privatization of power in the country. Yet with each win for quality, publicly owned and managed power, successive governments find new ways to increase the involvement of the private sector in the industry and undermine workers.
Last year, while the world was scrambling to contain the spread of Covid-19, the Indonesian parliament hastily passed the Omnibus Law on Job Creation, despite strong opposition from the labour movement. In October 2020, PSI General Secretary Rosa Pavanelli wrote an open letter to the government of Indonesia reflecting significant concerns that the Omnibus Law would impact labour rights and “liberalise and ultimately privatise electricity in Indonesia” in a manner that “contravenes Constitutional requirements for public energy.”
Over 1,000 workers took part in an online action to reject the latest scheme.
These fears were not unfounded. In the months since, the Indonesian government has unveiled new plans to privatise power, starting with the introduction of holding companies. These tactics have drawn renewed opposition from PSI affiliates, despite the challenges of organising and protesting in a pandemic. Turning to Covid-safe tactics, over 1,000 workers took part in an online action to reject the latest scheme. This unprecedented online rally begins a new stage in the struggle to keep power in public hands.
A brief history of the struggle against power privatisation in Indonesia
Over the last 20 years, PSI affiliates including Serikat Pekerja PT PLN (Persero) or SP PLN, Persatuan Pegawai PT Indonesia Power (PP IP), and Serikat Pekerja PT Pembangkitan Jawa Bali (SP PJB), have been actively monitoring and fighting government efforts to privatize the sector.
In 2002, the government introduced the Electricity Law No. 20, allowing greater private sector participation in the electricity sector; in 2004, following union action, the Constitutional Court revoked this law, when the provisions for a competitive electricity market and unbundling of the state-owned PLN were deemed unconstitutional.
Seven years later, new legislation was introduced. The Electricity Law No. 30 established that PLN would remain vertically integrated and control the national transmission, generation, and distribution of electricity. However, it would also allow for some increased privatisation of the industry – once again, the unions fought this, and once again, the Constitutional Court emphasized that any attempt to privatize power sector would contravene the constitution.
A new tactic to privatise: holding companies and IPOs
After these defeats at the hands of both organised workers and the Constitutional Court, the Indonesian government has had to devise new ways to involve the private sector in the industry. The latest is through establishing holding companies.
Under this scheme, the government sets up a holding company controlling stock and company assets, and then sells some of the shares through an Initial Public Offering (IPO). The process includes the merging of several state-owned companies and subsidiaries. Currently, there are attempts to form a holding company for Geothermal Power Plants (PLTP) and Steam-Coal Power Plants (PLTU).
The IPO process means selling off the shares owned by a public company to other – private – parties. This sees the entry of private individuals or enterprises into the company’s share ownership structure. In other words, it is privatisation, whatever the government chooses to call it.
Unions have made it clear that this is unacceptable. The plan bears the potential to violate the meaning of ‘under the powers of state’ as established by the Indonesian constitution. This protects electricity as “a sector of production which is important for the country and affects the life of the people.”
PLN provides affordable electricity to the people and has managed and operated power for at least 76 years since the independence of Indonesiai. Experience around the world demonstrates again and again that privatisation will lead to more expensive power, less reliable power, particularly for the least wealthy communities as well as cutting wages and conditions of workers.
Private sector promises... have almost universally failed to materialise
A new set of demands
To address the new guise the Indonesian government has given power privatisation, unions have developed a 5-point set of demands rejecting all strategies to privatise any part of public energy and expressing strong support for the public agency, PLN, to be the lead agency in building Renewable Energy Management in Indonesia.
PSI continues to support its Indonesian affiliates in this struggle, with General Secretary Pavanelli once again writing to the government to urge them to reconsider their decision in line with both their domestic constitutional obligations and the international experience of forty years of problematic privatisations. The fate of many countries, where “private sector promises of new investments, greater efficiency and lower tariffs have almost universally failed to materialise”, is one we believe Indonesia should avoid.