Case Study in Indonesia: Union fight against privatisation in the electricity sector

stop-privatisationjpgThe union of workers in the Indonesia electricity company, SP.PLN, has successfully campaigned against privatisation in the electricity sector. During the campaign unions and NGO working together managed to generate significant public support for maintaining Indonesia’s state-owned electricity company as a national, publicly owned assest.

The campaign has been in response to the government’s introduction of legsilation to liberalise of the electricity market in 2002 (through the new law No. 20/2002 on electricity), and thereby open it up for foreign investment. The privatisation law would have allowed the sale of PT Perusahaan Listrik Negara (PLN), Indonesia’s state-owned electricity company including power plants, power transmission, power distribution, power sales and management of the power market and power system. The law was part of an agreement imposed by the World Bank in its October 2003 US $242.6 million loan package.

An anti-privatisation campaign was established in response to the legislation and the campaign group lobbied the government and members of parliament, and held seminars and public discussions. The union argued that the privatisation of electricity was a donor driven programme that was being inappropriately imposed on the Indonesian government, and that the agenda of privatisation had been shown to fail in a large number of countries.

In December 2004 the union, as part of a coalition with NGOs, won a landmark decision in the Indonesian Constitutional Court (herewith the decision case), which cancelled the national government’s law package to unbundle and privatise the country’s electricity system. Significantly, the court declared that electricity should be controlled by the state.

In its judgement the Court made reference to international experience in stating that privatisation would harm the country. The trade union / NGO coalition that filed the law suit cited experiences of failed privatisation programmes in other countries and argued that quality public services in electricity needed to be provided through the public sector. During the court proceedings David Hall of the Public Service International Research Unit (PSIRU), University of Greenwich in London, testified to the court about the history of electricity privatisation in England and other countries.

Despite the sucessful outcome in court, the annulment of the law has not ended the privatisation of energy services, and the government has since then introduced a programme of decentralisation of electricity services.

The union’s campaign has included a range of actions, such as awareness raising to the public, students and union members, radio talk shows, public seminars and forums, published campaign materials, mass rallies and strike, and a threat to switch off the electricity power. The union had to raise money for the campaign and also put in place a special campaign fund. The campaign has also had the added advantage of increasing the activism of union members. In addition, two other electricity unions (SP. PJB and PP Indonesia Power) have cooperated in the campaign and have initiated action against privatisation.

Media Release:Indonesian Constitutional Court rejects electricity privatisation law

ICFTU (April 2006): Fighting for alternative (cases of successfull trade union resistance to the policies of the IMF and World Bank

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