CUNY Expert: Article 33 an Asset Against Energy Crisis

Shaun Sweeney from the City University of New York testifying as an expert for the Petitioners at a judicial review hearing of the Job Creation Law, Monday (1/15/2024). Photo by MKRI/Ifa.

JAKARTA (MKRI) — Article 33 of the 1945 Constitution is a precious gift not only to the Indonesian people, but also to the world in a time of trying to address the climate crisis and to deal with the energy transition in a just and equitable manner. Article 33 is seriously compromised by the direction of policy in Indonesia around energy, and particularly the electricity sector.

The statement was made by Shaun Sweeney, Director of International Program for Labor, Climate, and Environment of the City University of New York’s School of Labor and Urban Studies at a judicial review hearing of Articles 38 and 42 of Law No.11 of 2020 on Job Creation Law on Monday, January 15, 2024. The petition No. 39/PUU-XX/2022 was filed by 10 workers’ unions and 109 individuals, including the workers’ union of the state-owned electricity company PT Perusahaan Listrik Negara (Persero) or SP PLN, the workers’ union of Indonesia Power or PP IP, and the workers’ union of PT Pembangkitan Jawa Bali.

“As the way to conduct a just energy transition, I will make two points. The first point is the policy will lead to a further loss of control, and the second point is there is there is an alternative to the policy, which will maintain the integrity of Article 33,” he said at the hearing chaired by Chief Justice Suhartoyo.

He revealed that there had been a deep policy failure, which is an overreliance on the private investment from private companies in order to accelerate the transition. He added that there is a strong correlation between the policies being discussed at the hearing. The policy of power purchase agreements conducted with independent power producers alongside the unbundling of public energy companies into generation transmission and distribution and two of the main policies promoted and developed by the World Bank in the 1990s.

“It was part of a structural adjustment agenda, which was to drive privatization in many countries in the world using development aid as a coercive weapon. The called this model “the standard model.” In other words, the same policy would apply to all countries if they wanted to receive development finance (from the World Bank),” said Sweeney in his expert testimony for the Petitioners.

Alternative Schemes

The Petitioners also presented Nusyirwan as an expert. He asserted that with all of its human resources and experiences, PT PLN (Persero) is highly capable of providing the community with reliable, affordable electricity and that the state should support it with policy that prevents the state’s overreliance on power purchase from independent power producers (IPP).

The Constitution mandates, he added, that the reinforcement of power plant ownership schemes by the PLN be comprehensive. The current holding scheme is half-hearted since it only targets holding companies under the control of PT PLN (Persero).

“As the Constitution-mandated electricity SOE in the provision of electricity, it is only natural that various power plants, which are in fact also produced by state- and region-owned enterprises become part of the holding and ownership in the PT PLN (Persero) business so that the state’s public service function providing electricity through the electricity SOE can be enjoyed more by the public,” he explained.

Another expert for the Petitioners, former constitutional justice Maruarar Siahaan (2003–2009), also said that there is enough reason to grant the petition. He explained that the 1945 Constitution along with Pancasila as the basis of the state and the nation’s philosophy and way of life are the sources of government, legal, social, and economic policies that demand compliance before any amendment. The Preamble to the Constitution, he added, also contains the ideals of the proclamation of independence.

Must Be Controlled by State

Meanwhile, Adi Pratomo, in his testimony as a Relevant Party, stressed that as a public utility, electricity must be controlled by the state since it the essence of public interest would be missing otherwise.

“In the control of public utilities, the state has no other choice but to exercise dominant control compared to private companies. It must regulate its provisions, procurement mechanism, and even electricity tariffs so that all levels of society can obtain affordable electricity. If the control of public utilities is given to private companies, they would take a large profit with the implication of owners of capital (private companies) benefiting while there is loss of social welfare in the part of the community,” he emphasized. 

Adi explained that important branches of production—in this case electricity—must be controlled by the state, which means that it is not enough for the state to only exercise authority and determine policies and supervision. This is because, he added, electricity is special compared to other products, where its procurement requires a long time and is complex. In addition, with the high number of underprivileged people in Indonesia, the state must dominate in its control of management and procurement.

“Because if it is not dominantly controlled by the state, the state cannot determine or decide its will on the provision of electricity for the people of Indonesia. So, it is not enough for the state to only exercise its authority by regulation and supervision alone. State control is not enough just through regulation of the economy, but must be interpreted as dominant management by the state through state-owned enterprises, in this case PT PLN (Persero), which is then prioritized for the greatest prosperity of the people,” he stressed.

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Concept of “Controlled by the State” in the Supply of Electricity

The Petitioners argue that the Job Creation Law regulates the supply of electricity for public interest to be unbundling. Prior to the a quo Law, Article 10 paragraph (2) and Article 11 paragraph (1) of Law No. 30 of 2009 on Electricity has been interpreted constitutionally through Constitutional Court Decision No. 111/PUU-XIII/2015 while the Electricity Law No. 20 of 2002 has been revoked by the Court on December 21, 2004 with Decisions 001-021-022/PUU-I/2003. Those Electricity Laws were ruled as such since the unbundling system in the supply of electricity was deemed unconstitutional. However, it is reenacted in the latest Job Creation Law.

The Petitioners believe that the substance of Article 10 paragraph (2) of the Job Creation Law is the same as that of Article 10 paragraph (2) of the Electricity Law, which the Court ruled conditionally unconstitutional through Decision No. 111/PUU-XIII/2015. They also argue that electricity is a crucial branch of production for the state that affect the livelihood of many was emphasized by the legislatures in the consideration letter a and the elucidation to Article 3 paragraph (1).

In addition, they believe that the unbundling system means that electricity supply business be separated into generation, transmission, distribution, and sales business. This clause practically commodifies electricity. They emphasized that electricity business activities that are carried out competitively by treating business actors equally and by separate or unbundled business entities are unconstitutional following the legal considerations of the Constitutional Court Decisions 001-021-022/PUU-I/2003. Therefore, in their petitum, they request that the two articles be declared unconstitutional.

Author       : Utami Argawati
Editor        : Lulu Anjarsari P.
PR            : Tiara Agustina
Translator  : Yuniar Widiastuti (NL)

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.

Monday, January 15, 2024 | 16:01 WIB 66