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

            Supported by:
                           Discussion Agenda

1.   EGI-Indonesia Team
        Research Team
        Advisory Panels
2.   The Context
3.   Research Methodology
4.   Research Findings
5.   Good Practices in Governance
6.   Governance Challenges
7.   Recommendation
8.   Plan for Action
                     EGI-Indonesia Team (1)
   Research Team:
    1.   Indonesian Institute for Energy Economics (IIEE)
    2.   Indonesian Center for Environmental Law (ICEL)
    3.   Pelangi
    4.   People Centered Economic and Business
         Institute (IBEKA)
    5.   Working Group on Power Sector Restructuring
    6.   WWF-Indonesia

                               EGI-Indonesia Team (2)
   Advisory Panel:
    1. Dr. Bambang Adi Winarso, Coordinating Ministry of Economy
    2. Dr. Bambang Brodjonegoro, Independent Commissioner of PT PLN
         (Persero), and Dean of Economic Dept. of the University of Indonesia
    3.   Dr. Irwan Prayitno, Member of Commission VII (Energy, Environment,
         Research and Technology) of the House of Representatives.
    4.   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
    5.   Mr. Endro Utomo Notodisuryo, Transparency International
         Indonesia, and Former Director General of Electricity & Energy Development
    6.   Mr. Faisal Basri, Commissioner of the Oversight Commission for
         Business Competition (KPPU), and Lecturer at University of Indonesia
    7.   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
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

                       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,
      d. Sub-group the Research Team to divide work

                                Research Findings (1)

 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
   General description of roles, functions, obligations of
    government institutions
       Varying interpretation of jurisdictions & authority
       Grey and blank areas
       Undermines independency of decision maker.

                                  Research Findings (2)
   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
                                 Research Findings (3)

   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

     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

        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

       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

                       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
       Provision of information and documentation
       Public participation
       Decision compliance
   Multidimensional crisis that lead to pragmatic
    approach and short term solution
                       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.
        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
     Independent Regulatory Body
     Distinct planning body

        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
Plan for Actions
   Mainstreaming governance in operational terms:
     Awareness    program & capacity building of a wider
      audiences to create space & improve quality of
     Toolkit & assessment result as a mean

   Case:
     Processof developing the new electricity law to be
      more open & transparent

Thank You


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