State control is a critical element of electricity generation business in Indonesia given the vitality of electricity to the state and the public. The interpretation of state control over the electricity sector has been a subject of endless debates, and the recent Constitutional Court Decision No. 39/PU-XXI/2023 (MK Decision 39) shows that the story is indeed far from being concluded.
MK Decision 39 declares that the phrase ‘may’ in the amendment to Article 10 (2) of Electricity Law (regarding the possibility of having a “bundling” or “unbundling” electricity business) is unconstitutional and without binding force.
This poses a serious question with huge implication, namely, is the involvement of private sectors in the electricity generation business without getting an integrated electricity business license (IPP Business Model) still legal post the decision?
Our short answer: the IPP Business Model should still be legal. To understand why, in this newsletter, our Managing Partner, Pramudya A. Oktavinanda SH, LLM, PhD, our Senior Partner and head of our Power Department, Kirana D. Sastrawijaya, SH, MM, together with our senior associate, Angela Vania Rustandi, SH, LLM, will walk down the memory lane and analyze various Constitutional Court (MK) decisions over the years that show a consistent pattern of balancing state control and private participation in the electricity sector.
We are also pleased to be joined in authoring this newsletter by Dr. Ima Mayasari, SH, MH, an academician and a legal scholar having in-depth experience in Administrative Law, regulatory reform and public policy. Her writings include the interpretation and implementation of Article 33 (2) of the Indonesian 1945 Constitution on the scope of state control versus regional autonomy.
See the newsletter here: Client Alert – MK Decision on Electricity Law
