Analyzing the Dynamics of Indonesian Energy: Between Government’s Subsidy, Privatization, and Ecological Sustainability 

“Once I was told by a Parliament member that if a State-Owned Company is privatized, the wage would increase sevenfold. I said that currently I am working in PT PLN, and I am paid. But there is no guarantee that my children, my family will be able to get a job at PT PLN   well paid, just like me. Especially if PLN is privatized. I will feel very guilty if in the future, our children will have to pay expensive electricity price because PLN is privatized and I don’t do anything to stop it,” Andy Wijaya, the General Secretary of Persatuan Pegawai Indonesia Power, opened the focus group discussion on Tuesday, January 16, 2024. The discussion with the main theme of “Lesson-Learned from Electricity Privatization in the World was participated by trade union leaders in electricity sector. 

Two speakers discussed the future of electricity amidts today’s global energy landscape. Andy Wijaya from PPIP highlighted the domestic side of it, while Sean Sweeney from the global side.  Andy presented the structure and policy of PT PLN (Persero) and also the negative impacts of government subsidy on electricity price. On the other hand, Sweeny focused on the history of privatization and the needs for sustainable energy provision. 

“The objective of Indonesia as a country, as stated in the preamble of the Constitution of 1945, is to protect the whole people of Indonesia and the entire homeland of Indonesia, and in order to advance general prosperity, to develop the nation’s intellectual life, and to contribute to the implementation of a world order based on freedom, lasting peace and social justice,” said Andy. He added that PLN’s structure has changed, by forming subholding and different types of subsidiaries, reflects the complexity in the management of  national energy resources. 

Andy also said that PLN’s revenue increased from 288.86 trillion rupiah in 2021 and increased to be 311.05 trillion rupiah in 2022. 

“However, on the other hand, government’s subsidy also increased. This shows that the electricity sector in Indonesia relies heavily on government’s subsidy. This sparks a quesion:”how much longer will the government must pay the subsidy?” he asserted

In his exposition, Prof. Sweeney explained that privatization was and is part of the global policy. He added that this policy have a negative impact on the economy and ecology. He asserted that privatization is the main objective of many international finance institutions, such as the World Bank, oftentimes with the pretext of ecological matter. He thought that energy transition is not really happening, the green growth-based privatization bears the potential of environmental destruction. 

Sweeney then critized the World Bank for promoting privatization of energy sector in Global South. He said that this does not only reduce the state’s control over energy, but also increase national debts. 

“The government must take a more active role in the energy transition, instead of rely on the private sector,” he asserted. 

Sweeney then followed with the explanation on how countries around the world respond to privenergy transition. He used Spain as an example of a country who stop using coal, and Vietnam as a country that experience an energy expansion but rely heavily on coal. Sweeney also emphasize that public pathway is the alternative, by advocating public ownership on energy and rejecting any policy that promoting privatization. 

Andy’s and Sweeney’s view show both sides of problems in Indonesia’s energy sector. On one side, there is a need of better subsidy management and keeping the energy price affordable for the welfare of the people. On the ohter side, there is a challenge coming from the global policy and ecological situation that need a more sustainable approach and less dependence on privatization. 

Both speakers provided a clear description on the dynamics of energy sector in Indonesia. They highlighted the importance of balanced policy, that does not only account for the short term economic considerations, but also the sustainability of the environment and energy sovereignty in the long term. Both are clearly massive challenges for Indonesia provided that energy is important for national development and for improvement of peoples’ quality of life. 

With the increase of energy demand and the increasingly urgent ecological challenges, Indonesia is facing a critical options whether to continue relying on government’s subsidy and privatize its energy sector, or to shift or transition to an energy model that is more sustainable and anchored on the public interest? The decision will not only determine the future of Indonesia’s energy sector, but also the future of Indonesia’s economy and environment. 

In conclusion, the discussion provided valuable insights on different challenges and opportunities in the management of energy sector in Indonesia. They showed that the short term solution might not be sufficient to address a bigger problem. A holitic and sustainable approch, by taking into consideration all the economic, social, and environmental factors, is the key to ensure the future of bright and sustainable energy sector in Indonesia 

And as asserted earlier, privatization is not the solution for environmental-friendly energy.