12 November 2009

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Monopoly rears its ugly head

The state electricity monopoly (PLN) raised again its ugly head with more extensive damages as rotating power blackouts, previously limited mostly to areas outside Java, have now hit even the capital city, the center of political and commercial power.

PLN chief executive officer Fahmi Mochtar said Monday the rolling power outages in Jakarta and its surrounding towns, initially caused by the explosion of a transformer at the high-voltage transmission grid in Cawang in September, would continue until Christmas due to the technical problems at the Muara Karang power generation plant in north Jakarta.
Businesses are now counting their losses. But it is yet a small consolation that, contrary to the current legal uncertainty caused by the legal limbo of two suspended leaders of the Corruption Eradication Commission, PLN injected at least a sense of certainty – its power blackouts run on a fixed schedule.

In the past most power outages were sudden and unannounced, thereby inflicting losses not only due to the stoppage of operations or production but also the severe damages to production processes, production equipment/machinery.

Whatever blackout it is — whether sudden or scheduled — the power outage is causing big losses and gross inconvenience to the people. Still more devastating is the strengthening perception among the international and national business communities of the unreliability and acute shortage of electricity in Indonesia.

Unreliability and acute shortage of power supply has now become one of the biggest barriers to investment in the country.

Even though the government’s power policy and regulatory framework should share the responsibility for our current electricity crisis, the latest wave of blackouts should be blamed squarely on PLN’s poor management and unreliable maintenance service. How could the problem of a transformer cause blackouts to such a vast area for so a long time?

However, the problem is that consumers don’t have another alternative power supplier due to the PLN monopoly.

The latest bout of rolling blackouts therefore should signal a stronger warning that as long as PLN holds the monopoly over electricity generation and transmission we will remain gripped by an acute power shortage and unreliable power supply at the expense of our economy.

Accountability has never been the hallmark of a monopoly.

Put another way, the current rotating blackouts should force the government to accelerate the enforcement of the new electricity law, which was approved by the parliament in September.

This new legislation will break up PLN’s monopoly of the power sector and allow private investors and regional administration-owned companies to generate, transmit, distribute and sell electricity to consumers but still under a government-controlled tariff system.

The power crisis should serve as an alarm to the judges at the Constitutional Court not to be so narrow-minded as to annul the new electricity law as too liberal as the court’s panel of judges did in 2004 when it annulled a similar law designed to break up the PLN monopoly.

The current electricity debacle also should make it most urgent and imperative for the government and PLN to speed up the construction of the new generation plants launched four years ago under the 10,000 megawatt-crash program.

The Jakarta Post | Thu, 11/12/2009 8:15 AM | Opinion