In a welcome move, Indonesia’s Constitutional Court has ruled to keep electricity under public sector control, overturning a government initiative that sought to privatise the country’s energy sector. Privatisation of energy sector was introduced as part of the Job Creation Law, commonly known as the Omnibus Law. It raised concerns about potential negative impacts on workers in the sector. Evidence suggests that privatisation often leads to a deterioration in labour conditions, prompting PSI-affiliated Trade Unions to challenge the law in court. Their efforts resulted in a favourable ruling, safeguarding the rights of workers and ensuring continued public sector management of electricity.

While hearing the case on 29 November, the Chief Justice of the Constitutional Court stated that a number of articles in the appendix to the law were contrary to the 1945 Constitution (UUD) and did not have binding legal force. By revoking articles that are considered detrimental, the Constitutional Court provided new hope for the community and workers in the energy sector to obtain fairer and more sustainable policies. It reinforced that electricity is not just a commodity, but also an instrument of welfare that must be managed for the public interest.

The judicial review application for Omnibus Law was filed by PSI affiliated labour unions in the electricity sector, namely SP PLN, PP IP, and SP PJB, along with Gekanas. They considered a number of articles in Omnibus Law to be detrimental to their constitutionality. One point of criticism was the potential for the imposition of electricity tariffs that are equated with the concept of business, thereby eliminating the principle of state control as mandated by Article 33 of the 1945 Constitution. This had the potential to make electricity, as a basic need, difficult for the community to reach.

It is for the third time (2003, 2015, and now 2024) that the unions challenged government attempts to privatise Indonesia’s public energy system. All three challenges saw PSI, upon the request of affiliates, present international comparative analyses as a friend of the Constitutional Court (amicus curiae). In 2003 and 2015, the evidence was based on research by Public Services International Research Unit (PSIRU), delivered by the director. In 2024, the research was developed and delivered by the director of Trade Unions for Energy Democracy. All three challenges were successful in blocking the privateers. 

The importance of the international comparative analysis is that it allows the court to see evidence that the proponents of privatisation do not present, even though they are aware of it. The neo-liberal approach of unbundling — breaking apart the functions of electricity transmission, generation, distribution – coupled with deregulation and market-based tariffs, has weakened many national energy systems. It has led to increased tariffs, less investment and more profit extraction, deteriorating working conditions and attacks against energy unions. 

As distinct from 2003 and 2015, the 2024 testimony from TUED shows that for-profit control of energy systems is actually slowing the needed transition to low-carbon energy. 

"The Constitutional Court emphasised that the provision of electricity must still refer to the principle of state control. This refers to previous decisions, namely Constitutional Court Decision Number 012 of 2003 and Constitutional Court Decision Number 111 of 2015, which stated that basic infrastructure such as the electricity network should not be completely handed over to market mechanisms," said Mohammad Fandrian, lawyer of Gekanas.

Secretary General of PP IP, Andi Wijaya also gave a similar view. He emphasised that electricity is one of the important production branches for the country and controls the livelihood of many people, so it must be controlled by the state. 

Giving a statement in front of the Constitutional Court Building, General Chairman of SP PLN, Muhammad Abrar Ali expressed his appreciation for the Constitutional Court's decision. However, he said, his party will evaluate several applications that were not accepted, including review of network rental which is also regulated in the Renewable Energy Law.  "In-depth studies need to be conducted to close loopholes that have the potential to cause losses. As stated in the previous decision, the practice of unbundling is not justified. We must ensure that electricity issues remain under state control and fully belong to the state," Abrar stressed.

The current decision rests on the Indonesian Constitution, which defines access to energy as essential to the people’s welfare, and that any decisions about the energy strategy needs approval of the Indonesian House of Representatives (DPR).  Further, it appears to oppose unbundling and market actors setting tariffs, again asserting that such decisions need approval of the legislature. 

However, as we know, the privateers will continue to seek more profits from Indonesia’s energy sector, so union strength and unity remains essential.