EGI-INDONESIA

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EGI-INDONESIA

• The Electricity Governance Forum
• Bangkok, 29-31 March 2006
• Day 2

Supported by
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Discussion Agenda

• EGI-Indonesia Team
• Research Team
• Advisory Panels
• The Context
• Research Methodology
• Research Findings
• Good Practices in Governance
• Governance Challenges
• Recommendation
• Plan for Action

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EGI-Indonesia Team (1)

• Research Team
• Indonesian Institute for Energy Economics (IIEE)
• Indonesian Center for Environmental Law (ICEL)
• Pelangi
• People Centered Economic and Business Institute
  (IBEKA)
• Working Group on Power Sector Restructuring
  (WG-PSR)
• WWF-Indonesia

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EGI-Indonesia Team (2)

• Advisory Panel
• Dr. Bambang Adi Winarso, Coordinating Ministry of
  Economy
• Dr. Bambang Brodjonegoro, Independent
  Commissioner of PT PLN (Persero), and Dean of
  Economic Dept. of the University of Indonesia
• Dr. Irwan Prayitno, Member of Commission VII
  (Energy, Environment, Research and Technology) of
  the House of Representatives.
• Dr. Umar Said, Former Secretary General of the
  Ministry of Energy and Mining, Commissioner of PT
  Pertamina (Persero), and Lecturer at the
  University of Indonesia
• Mr. Endro Utomo Notodisuryo, Transparency
  International Indonesia, and Former Director
  General of Electricity Energy Development
• Mr. Faisal Basri, Commissioner of the Oversight
  Commission for Business Competition (KPPU), and
  Lecturer at University of Indonesia
• Mr. Puguh Sugiharto, Former Chairman of the
  Working Group for Good Governance in the
  Electricity Sector, Vice Chairman of the
  Indonesian Renewable Energy Society, and Director
  of PEN Consulting

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The Context

• 1990s electricity reform had been initiated
  (IPP).
• 1998
• Reform direction adjusted
• Distinction of policy maker/regulator and players
  (including SOE)
• Accommodate requirements for economic bailout
  (unbundling, divest major share of SOE, multi
  buyer-multi seller, time line).
• Electricity Law 20/2002 reflected this structure.
• 2004 Constitutional Court annulled Law 20/2002
• Electricity should be perceived as infrastructure
  for the national economic development. The State
  should regulate, facilitate operate electricity
  provision to be able to exercise control over the
  sector.
• Private participation competition shall be
  within the above context
• Legal base is reverted back to Law 15/1985
• 2005
• Interim measures to overcome inconsistency
  Government Decree 3/2005, Ministerial Decree
  9/2005 and 10/2005 (regional autonomy, rural
  electrification development RE, corporatization
  of PLN)
• Closed process of preparing the draft of new law

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Research Methodology

• Strategy of Implementation
• a. Select indicators priority, relevance, time
• b. Select case study as the base for assessment
  important, controversial
• PP RP Law No. 20/2002 on Electricity
• ESA The Development of Gas Combined-Cycle on
  Power Plant (PLTGU) in Pemaron-Bali
• c. Data collection questionnaire, literature,
  interview, discussions
• d. Sub-group the Research Team to divide work

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Research Findings (1)

• POLICY PROCESS
• Development process of Law 20/2002
• Steps of decision making are clearly defined,
  both at the legislative and executive body.
• Information about the process of policy
  development and establishment inside both
  institutions is not available to the public
• General description of roles, functions,
  obligations of government institutions
• Varying interpretation of jurisdictions
  authority
• Grey and blank areas
• Undermines independency of decision maker.

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Research Findings (2)

• REGULATORY PROCESS
• Regulatory Body
• Within the executive
• No explicit statement on its function to balance
  various interests in the electricity sector
• Grey and blank areas in institutional role,
  function and obligations
• Government do not have guidelines on documents
  confidentiality and procedure on public access
  for information
• Significant role of the official in chair
  position
• The legislative has public hearings to gather
  public opinions
• There is no strong legal base concerning
• Obligation to provide information for general
  public,
• Mechanism to assure public participation,
• Accommodation of public opinion in the policy
  materials produced by the regulator

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Research Findings (3)

• ENVIRONMENTAL SOCIAL ASPECTS (ESA)
• DGEEU and State Ministry for the Environment
  handle environmental issue in electricity sector
  clear jurisdiction but lack of coordination
  between them.
• The government has adequate capacity for
  accommodating ESA in their tasks
• Commission VII has several knowledgeable staff,
  but there is no designated teams to handle ESA in
  electricity sector.
• Limited attention on ESA in national electricity
  planning and during the sector reform process.
• There is no minimum environmental performance
  standard in electricity sector

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Good Practices in Governance (1)

• Role of donor agencies during policy reform
• Available information and documents position on
  policies, binding conditions on loan
  disbursement, financial disbursement relating to
  loan condition, and technical assistance projects
• Capacity of Legislative Committee
• Expert staff
• Access to documents
• Budgetary allowances for expert staff and
  research
• Authority to call in the appropriate
  representatives

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Good Practices in Governance (2)

• Capacity of CSO to address environmental and
  social aspects (case study)
• Documentation filing system by CSO
• Include environmental and social analysis to
  support their petitions
• Executive capacity to evaluate environmental and
  social issues
• Special division with relevant background
• Availability of annual training
• Funding for research

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Good Practices in Governance (3)

• Mechanism for the establishment of Electricity
  Law No. 20/2002 in the Legislative
• Reasonable time required six terms/sessions
• Quorum
• Involve parties in favor and against the
  establishment

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Governance Challenges

• Lack of awareness of good governance among
  stakeholders in electricity sector, lead to low
  capacity to implement the principles
• There is no legal base and mechanism to ensure
• Provision of information and documentation
• Public participation
• Decision compliance
• Multidimensional crisis that lead to pragmatic
  approach and short term solution

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Response Follow Up

• An improvement in DPR website
• Agenda, work in progress, completed legislations
• Message board for public input, procedure for
  public participation
• Develop The National Electricity Through
  Implementation of Good Governance, a seminar
  focusing on the awaited Electricity Law, 26
  January 2006.
• EGI-Indonesia findings have been published in the
  Indonesian Energy Economics Review, Volume
  I-2006.
• EGI-Indonesia Team has formally requested to be
  in the DPR-RI public hearing agenda.

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Recommendation to Improve Electricity Governance
in Indonesia (1)

• Develop a clear shared vision on national energy
  and electricity development policy
• Publish a clear government direction pertaining
  to
• Conflicting role and function in executive level
• Overlapping jurisdiction of authority in
  government
• Missing obligation
• Coordination among government bodies and cross
  sectors
• Independent Regulatory Body
• Distinct planning body

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Recommendation to Improve Electricity Governance
in Indonesia (2)

• Improve transparency
• Dissemination of information related to policy
  and regulation making process to the public.
• A strong legal base and clear mechanism to ensure
  public participation in key decision making
  process.
• Establish a roadmap to promote governance in
  electricity sector
• Awareness program governance concepts its
  operational elements
• Establish codes and standards including good
  business conduct and ethics in electricity
  sector.
• Assess governance implementation on regular basis
• Publish result

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Plan for Actions

• Mainstreaming governance in operational terms
• Awareness program capacity building of a wider
  audiences to create space improve quality of
  participation
• Toolkit assessment result as a mean
• Case
• Process of developing the new electricity law to
  be more open transparent

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• Thank You