PLN and Just Transition

Perusahaan Listrik Negara (PLN) is Indonesia’s national electricity pillar has an important role in materializing the sustainable energy vision in the country. With the climate change and global demand to move away from fossil energy sources, transition towards clean and environmentally clean energy is increasingly urgent. However, that transition is not solely related to technology or infrastructure. It also about ensuring the communities to get access to equal and affordable energy. In that frame, there came the concept of “just transition” as a guide to ensure that all community elements, especially worekrs and the vulnerables, will not be left behind during the massive transfomation. 

Therefore, unions in electricity sector, Serikat Pekerja PT PLN (Persero), Persatuan Pegawai PT PLN Indonesia Power, Serikat Pekerja PT PJB, dan Public Services International held a discussion between Trade Unions and Ms. Mercy Chriesty Barends, a member of Member of Parliament Republic of Indonesia (Commission VII on Energy, Mineral Resources, Research and Technology, Environmental Affairs) on August 22, 2023. 

Although Ms. Mercy Chriesty Barends did not present, the discussion went smothly and resulted in several follow up steps to ensure that a just transition in the electricity sector. 

Indah Budiarti, the PSI Project Coordinator, explained that the objective of this activity is to build a dialog and share lessons from the electricity situation in Indoensia from the perspective of the unions, to discuss the existing just energy transition and PLN’s current situation, to create a venue to discuss and share different innitiatives about union and the implementation of just energy transition in Indonesia, and more importantly, to strengthen the just energy transition in Indonesia that prioritize the affordable, safe for the communities around power plants, environmentally safe, and sustainable energy provision. 

Ian Mariano, the PSI SEA Subregional Secretary, asserted that energy is a human right and a basic need that affects all aspects of human lives, from household to industrial level. 

“PSI asserted that energy management and distribution must be in public’s hands, as a public good. During the energy transition era, this issue is increasingly more relevant. Energy transition that refers to the shift or transition from fossil energy source to low carbon energy sources is a topic that gains a spotlight all over the world. The objective is clear: to address the climate change and create a sustainable future,” said Ian. 

“However, the shift also brought about different impacts to the workers in the energy sector. The implications of this transition is not only about technology or environement, but also to guarantee social and economic justice for millions of workers in this industry,” he added. 

Similarly, PPIP’s Chairperson, Dwi Hantoro, said that this transition must treat all ewqually and must guarantee the safety and sovereignty of the state. “The discussion today will always considers our perspective as trade union. We will be able to formulate the position paper that we can use as our struggle in our future.” 

Meanwhile, in his presentation, SP PLN’s General Chairman, Muhammad Abrar Ali, said “Given the liberalization and privatization that theaten Indonesia’s electricity sector, SP PLN always make a case to the government. The reason is that we try to defend the electricity sector from being controlled by the privates through liberalization and privatization.” 

“We know that the Constitutional Court had decisions regarding this mattert, but unfortunately, we can not prove it. What does it mean by “controlled by the state” and how can we prove it otherwise? Including our current mishaps with the Law No. 6 of 2023. This law supposed to be an omnibus law which must have been suspended and must be reformulated under the law of law formation. However, the law did not proved a clear definition about omnibus law,” he explained. 

Under this condition, there are several regulations that theatens PLN as the main authority in electricity managers. For instance, the “take or pay” scheme that cause PLN to be oversupplied and holds the potential of making state experience a financial loss. There is an issue on the increasing use of PV rooftops and power wheeling. We gained information that this will not be getting any responses from the parliament, the government, and holding-subholdings entitites. 

“In addition, the problem with ‘take or pay’ scheme is that it is non-negotiable. Unde an oversupply situation, the question is how do we allocate the excess electricity? Will we save, sell, or shift the excess to other areas? The ministry of State-Owned Companies (BUMN) is planning to do restructurization regarding this scheme. There are power plants that will be deactivated due to the energy transition. There needs to be more better consideration on how to benefit from the energy mix effectively,” he asserted. 

Subsequently, Andy Wijaya, the General Secretary of PPIP, emphasized on some crucial points in his presentation. 

“First, we need to question whether the initiative is a stand alone of an integrated one. If it is not integrated, then we can say that it is just an arena of profit making and an effort to sell state assets,” he said. 

Another important point is about coal steam power plant (PLTU) performance assesment and energy transition. PLTU Pelabuhan Ratu and Pacitan show that they have good performance. Both of them are the mainstays of affordable and reliable electricity provision. However, ironically they are prepared to be retired and sold. Why do we want to sell units with good performance? 

“A side effect of this policy is that there will be an increase in electricity subsidy and compensation paid by the government and in the end, will create financial loss for PLN. Green energy supposed to be cheaper. But with the additional water management fee, that will not be the case. PLTA (hydropower) must pay BPJSDA (water resource management fee) to other state-owned company, not directly to the state Treasury Fund. This will put more burden to the energy transition process,” he said. 

Next, Andy highlighted the refurbishment scheme. The Energy and Mineral Resources Ministry held a study in Bandung to show the potential increase of hydro-power plant existing capacity using the refurbishment scheme. However, replacing old machine with the new ones does not necessarily increase the capacity of electricity production. There are other several factors such as Dam capacity and the flow rate. The fund comes from the third party such i.e. The World Bank and Rushydro that mediated by Pertamina Power Indonesia before reaching the electricity state-owned company will cause an increase in the electricity selling price. 

Therefore, in his conclusion, Andy reasserted the importance of defending the state controll over electricity. “This is the essence of our argument. Electricity is a production branch that is vital to the state, and it must be fully controlled by the state,” he added. 

This is in line with the Constitutional Court Ruling No. 001-021-022/PUU-I/2003 regarding the judicial review against Law No. 20 of 2004 and No. 111/PUU-XIII/2015 regarding judicial review agasint Law No. 30 of 2009, that electricity is a production branch that is vital for the state and therefore must be controlled by the state. 

There are at least four function in relation to the state control over electricity. First, the administrative function including permit (vergunning), license (licentie), and concession (concessie). Second, regulatory function including legislation by the Parliament and the government. Third, management function in form of State-Owned Legal Entities and State-Owned Companies. And fourth the oversight function which is the monitoring and overseeing by the State. 

In the dicussion, Tom Reddington, the PSI Oceania Sub-regional Secretary/Utilities Network Coordinator Asia Pasifik, invited participants to learn from South Africa. 

“I will share the just energy transition, more specifically on the just energy transition partnership. Andy Wijaya have mentioned earlier about the implementation of Indonesian government’s policy on this matter,” he started. Further, Tom explained how this program was carried out in South Africa and how it was initiated, and then explained different opportunities that could be used by energy unions in Indonesia regarding the partnership. 

“There is an opportunity to follow up this. And hopefully coming from the Trade Unions for Energy Democracy. This network involves trade unions from all over the world where PSI was involved in its establishment. TUED is trying to amplify trade unions’ demands in opposing The World Bank’s approach to energy transition. The network also tried to strengthen its analysis regarding that. 

He hoped that Indonesia will be the next host of the Asia Pacific TUED early next year. It will be good if Indonesia is willing to host the meeting that will invite trade unions from Asia Pacific that focuse on these issues and then able to integrate it in the global issues. Tom added that there has been a discussion with friends from South Africa about this program and issues. There are spaces to build solidarity with them. 

“I hope that you will be interested to host the meeting and provide us with a platform to include this discussion,” Tom challenged Indonesian trade unions. 

At the end of the discussion, Ian said that we have already seen the broad description of Indonesia’s energy transition current situation. Some Union’s observations and understandings show that this situation is considered as normal situation. Although we are facing so many challenges. The situation poses several threats to workers, particularly worekrs whose jobs depend on fossil fuel. The transition will have impacts on workers and communities, hence, we have to adapt to the changes brought about by the transition. The question is whether the transition is a just transition for the workers and communities? 

“We know and it is a fact that when ADP promotes the energy transition, workers and trade unions’ involvement is very minimum. ADB uses workers and trade unions to legitimate the transition instead of putting them in a significant position in the just transition it promotes. PSI’s position is clear that energy must be in public hands and workers must be in the position of objective and reliable. We have to keep the discussions with our allies and move forward as PSI affiliates and try to find a meaningful solution for the just transition,” he said. 

“I would also like to remind you all that we have stay alert. ADB and other international banks work together with governments and companies. Those banks involve themselves in development to gain profits from countries’ development agendas and hence, put pressures on trade unions’ position. Unions must stay of the forefront. Unfortunately, our parliament member could not present in this discussion but we must not get frustrated and keep on with our struggle. We must not lose our focus or backdown from gaining support. We have to keep collecting support from our allies and there are many other ways to invite civil society, progressive groups, and other unions to join our struggle,” he added. 

“PSI will continue to be a part of your struggle and to support our affilites. In this campaign, we will keep defending the energy to be in the public hands. Whatever ADB wants, unions must remind them that they have they social responsibility and must be a part of solution instead of creating more problems,” Ian ended.