Indonesian court judges electricity privatisation unconstitutional

14 February 2017
Trade unions in Indonesia turned to the Constitutional Court to examine a 2009 law on electricity designed to promote privatisation and market-based rules. While the Court’s decision agrees with the union’s stand, it appears to allow private sector participation under certain conditions.

Two Indonesian energy unions, SP Perjuangan PLN Persero and Pesatuan Pegawai Indonesia Power (PPIP) contested the law, which would lead to a reduction of the state’s role in electricity supply. Two articles of the new law do not correspond with the constitutional requirement that electricity supply must be controlled by the state.

The Constitutional Court took a cautious approach to this issue, no doubt not wishing to close the door on the promises of private investors.  However, it would appear that this cautious decision provides the unions with opportunities to:

  • halt management attacks and re-establish the strength and legitimacy of the union
  • build public and media scrutiny of the actual behaviour of the privateers
  • develop a solid national campaign against profiteering, price gouging and other market distortions in the electricity sector.

PSI has supported the union legal challenge and will continue to help with the next steps.  First and foremost, the unions must use the decision to help block government and management manipulations, including to block the yellow union that was weakening the union base. 

PSI will also help unions in Indonesia review the implications of the court decisions for other public services in Indonesia, especially water, such that all public service unions can champion universal access to quality public services. 

Also see