Privatization in the Electricity Sector Impacted in the Increase of Tariff, Global Union Federation Sent a Letter to President Jokowi

The support toward the fight of SP PLN to reject the privatization is not only coming from domestic country, but also from the global union, Public Service International (PSI). For the information, PSI is a prominent trade union in the public sector. With the membership of 30 million workers represented by 700 trade union affiliates in 154 countries.

Speaking in the press conference conducted by SP PLN Group on September 15, 2021, Ian Marino as the Southeast Sub-regional Secretary PSI conveyed that PSI General Secretary Rosa Pavanelli has sent a letter to Indonesian President, Joko Widodo.

In the letter, PSI mentioned the importance to reject and challenge privatization in the steam power plant (PLTU) and geothermal power plant (PLTG) in Indonesia. He stated that privatization around the world mostly has failed. Not able to achieve its objectives in fulfilling public service. Even the people should pay more expensive electricity price. 

That is why, the establishment of holding company and IPO to PLN subsidiaries is not appropriate. According to him, privatization will diminish the possibility to have a clean energy transition from carbon. Whereas Indonesia has committed to decrease carbon emission for 29% in 2030 by using renewal energy up to 23%.  

“Private company won’t be able providing low carbon energy, since their energy flow depend on fossil energy,” Ian stated. This is because the priority of private companies is to generate profit as much as possible for the shortest period.

Ian then gave example Philipinnes, where he lives.

“I am in Philippines witnessing the failure of privatization. I experience what’s happening when electricity being privatized for the last 20 years,” he said.

There’s similarity on how privatization being conducted in Nigeria and Philippines. Basically, this is a result of a financial pressure from the world to the government, then the privatization of electricity energy happened. Usually this happens through the change of the law on energy. The exact same thing was also happened in Philippines. So, in the end, all electricity energy, started from power plant and the network/line being privatized.

The result of privatization, Ian said, the electricity price becoming the most expensive in Asia, second after Japan. This is one of bad impact of the privatization.

“There’s term of fix payment or another term is abonemen or subscription. Where we must pay some amount of money each month, whether it’s being used or not. So, whether willing or not, the consumer should bear the burden. In the end, the private company is the one will control the energy, shown from how they increase the profit,” he said.

Other impact, continue Ian, taken the example of Philippines, till 2020, 10,000 workers in the electricity sector lost their job. So, instead of absorbing new workforce, what happened is some employment termination.

“Both in Nigeria and Philippines where electricity being privatized, the private companies have failed in fulfilling their promise in conducting the privatization,” he firmly stated.

Moreover, the electricity blackout still happened. Even currently, there’s a take-turn black out during the summer. The result is the availability service for the people can be fulfilled. The private company doesn’t really try to provide electricity for the people.

“We hope that Indonesian Government will see the lesson learned from many countries and use the study conducted by PSI as the considerations,” he said. PSI has worked in some countries where electricity has been privatized. And a failed privatization has impacted need to be bear not only by the government. The people will also bear the consequences, since after the private company gains the profit, the problem should be solved by the state.

Indonesia, as being mandated by the 1945 Constitution must defend the ownership of the energy in the public hand. In relation to that, PLN already has experience and ability to manage. Moreover, so far PLN has proofed that it able to provide a reliable and affordable electricity.

“So, the General Sectretary of PSI demands the government to stop the privatization in PLN. This is because PLN already has reliable workers for tenth of years,” Ian said.

The union in the energy sector in Indonesia and globally support government commitment toward the Paris Agreement and encourage the government to learn from what happened in Philippines and other countries where the privatization proofed to be failed. We don’t the same thing happened to the Indonesian Government,” Ian said.

Continuing what conveyed by Ian Marino, the General Chairperson of SP PLN M Abrar Ali said that privatization will impact in the increase of basic tariff of the electricity. Especially when the constitution mandated that electricity energy which serving basic life needs for many people should be controlled by the state and are not allowed to be privatized.

“That is why the state must guard the price is affordable and meet the just principles,” he stated firmly.

PLN Group that consists of three trade unions, continue Abrar, are very focus to enact the constitution mandate so then the electricity sector won’t be privatized. In this matter, SP PLN Group fight gained a support from the global union federation, PSI. Where PSI sent a letter to Jokowi demanded the electricity sector for not being privatized.

“Since this is the mandate of the constitution. The intention to privatize comes from the government, by creating the regulation so then the private sector can enter. Whenever a law passed to open a chance for privatization the trade union file a judicial review. The result is the Constitutional Court asserted that for the sector serving public interest are not allow to be privatized,” Abrar said.

Supposing, PLN being expanded as a holding company in the electricity sector. So then it can be in line with the constitution, where the electricity sector still under state management. Should there any crack of a possibility for privatization, it’s just right that the trade union reminding the government on this issue.

In relation to the management of PLN position, Abrar confess that the union has sit with the the Directors of PLN. The trade union has explained union role and function to also keeping the company sustainability. In the other side, the PLN Directors that perceive themselves as a part of SOE, so they only follow whatever the government policy is.

“In the momentum of the joint anniversary attended by the Directors and the Commissioner of PLN, we hope that this will be followed up by a meeting. So, then we can collectively maintain the sustainability of our beloved company,” said Abrar.

When being asked whether PLTS Atap (Rooftop Solar Power Plant) has inflicted a financial loss for PLN, Abrar gave an analogy. “Should you willing to become a hunter, be a reliable hunter. Don’t hunt in the zoo.”

Should it willing to do some business, don’t burden PLN. Because there’s requirement in the law that PLN should buy produced by private power plant, including PLTS Atap.

This is confirmed by the General Secretary of SP PJB, Dewanto Wicaksono. “As stipulated in the new law, the tariff scheme should be paid by PLN is 1:1. The tariff is 100% where PLN should purchase according to the selling price. In another word, must be sold in accordance with the purchasing price. While there’s other cost bear by PLN.”

“By the scheme of 0,65: 1 that so far being implemented, PLN face the difficulties, moreover with 1:1,” said Dewanto.

“It will be better if there’s no regulation obligated PLN to purchase. And don’t even implement that in the area where there’s electricity surplus. But if this implement in the area where electricity still inadequate, or in the area where the fuel still being used, this is more reasonable,” he added.

Does privatization will hinder the sustainability of PT PLN? Responding to this question, Abrar answered that this surely will disturb company sustainability. Currently, PLN already has a lot of burden. Don’t add them with the entrance of private sector, merely oriented in getting profit.

In this regard, Dewanto added, the privatization in PLN or the one in the holding surely will disturb. When privatization happened, it means there will be private role enters within the SOE.

Of course, in the beginning it will be limited. For example, 10%. But there’s no guarantee that the 10% will have less authority than the 90%. In many cases, the one with more power is the 10% and the 90% will be gnawed. So, then the company sustainability will be hindered

“Based on PSI survey from various countries, it’s proven that the privatization is started small but overtime it’ll getting bigger and the big one in the end will have no control. PSI has provided a real-life example, and this should become our lesson learned. Do not let the bad impact of privatization happened in Philippines also happened in Indonesia,” he asserted. (*)

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