3 September 2002 – The Indonesian parliament is expected to approve a new electricity law this week, which will remove the present monopoly of state-owned PT Perusahaan Listrik Negara. The legislation is aimed at encouraging more investment in the sector which is in desperate need of additional capacity is electricity shortages are to be avoided in the coming years.

“Parliament is scheduled to take a decision to approve the new electricity law on September 4,” Mines and Energy ministry spokesman T.A Nurwinakun told reporters, adding all debates had now finished.

“According to the draft law, competition will be allowed in selling electricity to the public, so the risk of investment can be shared through the market mechanism,” he said.

But Nurwinakun said Perusahaan Listrik Negara (PLN) would still be important in electricity distribution and would work with the independent power producers.

“The law will allow competition in several areas which will be decided by a supervisory council which will prevent unhealthy competition,” the spokesman said.

“Independent power producers can talk with PLN when they want to use the PLN grid. PLN still has an important role to provide electricity, especially in areas that have not yet been opened for competition,” he added.

Nurwinakun said the government would still give subsidies for poor people to buy electricity, particularly in areas where competition was impossible.

Power demand in Indonesia is currently estimated to be growing by around 10 per cent annually, one of the most robust markets in Southeast Asia.