Showing posts with label public service. Show all posts
Showing posts with label public service. Show all posts
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Protection of (Water) Consumer Rights in Indonesia (Online Discussion)

Saturday, May 29, 2010

Indonesia in Motion will hold an online discussion on how to protect water consumer’s rights in Indonesia. The discussion will be held in Bahasa Indonesia.

You can either register through event brite or follow the instructions below.  


Following is the announcement (in Bahasa Indonesia):

Serial diskusi 'Indonesia in Motion' Insya Allah akan mengudara lagi pada jumat pekan depan tanggal 2 Juni 2010. Dengan ini kami mengundang kembali Saudaraku semuanya untuk mengikuti seri diskusi online "Indonesia in Motion".
Waktu:  Rabu, 2 Juni 2010, pk. 19.00 - 20.30. (GMT + 0)

Pembicara: Mohamad Mova Al 'Afghani
(Ph.D Candidate, UNESCO Centre for Water Law, Policy and Science. University of Dundee, UK) 

Chair: Rizal Yaya
(PhD Student University of Aberdeen UK) 

Tema: "Perlindungan Hukum bagi Konsumen Air di Indonesia"

Diksusi tersebut sangat menarik mengingat belum lama ini Jakarta mengalami krisis air dan sangat mungkin kejadian serupa berulang kembali. Diskusi online akan dilakukan lewat fasilitas Yahoo Messenger. Untuk berpartisipasi, silakan add indonesiainmotion@yahoo.co.uk (Indonesia in Motion)

 
Tambahan informasi dari Indonesia Law Reporter:
Acara ini bisa juga diikuti dari twitter dengan menggunakan hashtag #lawtalk atau me reply ke @movanet atau mendengarkan broadcast di home page Web Conference Indonesia Law Report

Prosiding dari acara ini akan disiapkan oleh Indonesia in Motion. 

Bahan bahan diskusi.
Makalah diskusi dengan judul “Perlindungan Hukum Terhadap Konsumen Air di Indonesia” dapat di download di sini
Op-ed and blog posts:

Transparency in Water Services
Indonesian Water Services Suffering from a Lack of Governance
Supreme Court Decision on Water Monopoly in Batam
Missing water and shadow users
14 Disturbing Facts about Jakarta's Water
Tomorrow, the Freedom of Information Law is in force!
Three ways for your business to be implicated by the new Indonesian freedom of information law
Where to complain for bad water services – a comparison
Jakarta’s water crisis, whose fault?
Human Right  Aspects of Private Sector Participation in the Water Sector
Is water a commodity or human rights?
The human right to water is not a property right
Why busy with the right to water instead of governance
Consultation on the Human Right  Aspects of Private Sector Participation in the Water Sector: more responses from the private sector
The Economist and the human right to water
Transparency Agenda in Water Utilities Regulation
Hukum Air (Water Law) is not really a topic in Indonesia
Papers:
Safeguarding water contracts in Indonesia
Constitutional Court review and the future of water law in Indonesia
Presentation:
Anticipating water trade


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Transparency Agenda in Water Utilities Regulation

Thursday, May 20, 2010

 

I contributed a paper about the transparency agenda in water utilities regulation and the role of Freedom of Information Law for the next edition of the Journal of Water Law. The case studies are England and Indonesia. The paper is quite relevant for the situation in Indonesia as the Freedom of Information Law has just been recently enacted and not so many literature is available. This is the content of the forthcoming Journal of Water Law which you might find interesting:

 

CONTENTS

 

Preface

Promoting water (law) for all Addressing the world’s water problems – a focus

on international and national water law and the challenges of an integrated approach

PATRICIA WOUTERS, SARAH HENDRY

 

International Water Law

Reframing the water security dialogue

DAN TARLOCK, PATRICIA WOUTERS

 

Introducing an analytical framework for water security: a platform for the refinement of

international water law BJØRN-OLIVER MAGSIG

 

The principle of good faith in the Argentina-Uruguay pulp mills dispute

TERESA LIGUORI

 

Examining the thresholds of harm for international watercourses in the Canada-US

context: would a mining development in the Flathead River watershed violate the Boundary

Waters Treaty?

MICHAEL AZULAY

 

The concepts of equitable utilization, no significant harm and benefit sharing under

the Nile River Basin Cooperative Framework Agreement: some highlights on theory and

practice

MUSA MOHAMMED ABSENO


International water law in Central Asia: commitments, compliance and beyond

DINARA ZIGANSHINA

 

National Water Law

Protection of foreign investment and the implications for regulation of water services and

resources: challenges for investment arbitration
ANA MARIA DAZA VARGAS

Responding to the ‘water crisis’: the complementary roles of water governance and

the human right to water
HILARY J GRIMES

The transparency agenda in water utilities regulation and the role of freedom of

information: England and Jakarta case studies

MOHAMAD MOVA AL ‘AFGHANI

 

Valuing water in law: how can Indigenous cultural values be reconciled with Australia’s

water law in order to strengthen Indigenous water rights?

TRAN TRAN

An analytical framework for legal regimes applicable to freshwater ecosystems

HUGO TREMBLAY

Bridging the water law, policy, science interface: flood risk management in Scotland

CHRIS SPRAY, TOM BALL, JOSSELIN ROUILLARD


Related Posts:
Transparency in Water Services
Indonesian Water Services Suffering from a Lack of Governance
Supreme Court Decision on Water Monopoly in Batam
Missing water and shadow users
14 Disturbing Facts about Jakarta's Water
Tomorrow, the Freedom of Information Law is in force!
Three ways for your business to be implicated by the new Indonesian freedom of information law
Where to complain for bad water services – a comparison
Jakarta’s water crisis, whose fault?

Human Right  Aspects of Private Sector Participation in the Water Sector
Is water a commodity or human rights?
The human right to water is not a property right
Why busy with the right to water instead of governance
Consultation on the Human Right  Aspects of Private Sector Participation in the Water Sector: more responses from the private sector

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Jakarta’s water crisis, whose fault?

Sunday, May 16, 2010

 

The company refused to be blamed:

 

“The massive silting that broke the pump in Pulogadung was caused by the declining quality of water. We fixed the pump and parts of the pipeline network,” Yosua said. “This  shortage is not entirely our fault.”
He said it would take more time for water to reach areas located farther from the main pipelines, which had been empty for days.
“And there are people in several neighborhoods in North Jakarta who collect water from hydrants too, and this makes [the distribution of water] even worse,” Yosua added.
Aetra Air Jakarta said it was becoming increasingly difficult to provide millions of Jakartans with potable water.
“The city has become overpopulated, and the levels of pollution have increased exponentially,” Yosua said. “These two factors greatly contribute to water  shortages in the city.”


Consumers are entitled to water services based on the service level as determined by law (if there are components of the service levels which are based on contracts, then they will not apply, as the law automatically derogates them). In Indonesia, water quality level is determined by the decree of the ministry of health  907/MENKES/SK/VII/2002 and Government Regulation 16/2005 (GR 16/2005) Article 6.2. In Jakarta, the continuity of water services is guaranteed by Regional by Law 13/92 and 11/93.

If any of these service levels are violated, based on GR 16/2005, consumer shall have the right to compensation. Article  67.1.a and 68.2.e of GR 16/2005 stipulates (in Bahasa):


(1) Setiap pelanggan air minum berhak:
a. memperoleh pelayanan air minum yang memenuhi syarat kualitas, kuantitas, dan
kontinuitas sesuai dengan standar yang ditetapkan;
b. mendapatkan informasi tentang struktur dan besaran tarif serta tagihan;
c. mengajukan gugatan atas pelayanan yang merugikan dirinya ke pengadilan;
d. mendapatkan ganti rugi yang layak sebagai akibat kelalaian pelayanan; dan
e. memperoleh pelayanan pembuangan air limbah atau penyedotan lumpur tinja.

Hak dan Kewajiban Penyelenggara
Pasal 68
(1) Setiap penyelenggara berhak:
a. memperoleh lahan untuk membangun sarana sesuai dengan peraturan perundangundangan;
b. menerima pembayaran jasa pelayanan sesuai dengan tarif/retribusi jasa pelayanan;
c. menetapkan dan mengenakan denda terhadap keterlambatan pembayaran tagihan;
d. memperoleh kuantitas air baku secara kontinu sesuai dengan izin yang telah
didapat;
e. memutus sambungan langganan kepada para pemakai/pelanggan yang tidak
memenuhi kewajibannya; dan
f. menggugat masyarakat atau organisasi lainnya yang melakukan kegiatan dan
mengakibatkan kerusakan prasarana dan sarana pelayanan.


(2) Setiap penyelenggara berkewajiban untuk:
a. menjamin pelayanan yang memenuhi standar yang ditetapkan;
b. memberikan informasi yang diperlukan kepada semua pihak yang berkepentingan
atas kejadian atau keadaan yang bersifat khusus dan berpotensi akan
menyebabkan perubahan atas kualitas dan kuantitas pelayanan;
c. mengoperasikan sarana dan memberikan pelayanan kepada semua
pemakai/pelanggan yang telah memenuhi syarat, kecuali dalam keadaan memaksa
(force majeure);
d. memberikan informasi mengenai pelaksanaan pelayanan;
e. memberikan ganti rugi yang layak kepada pelanggan atas kerugian yang
dideritanya;
f. mengikuti dan mematuhi upaya penyelesaian secara hukum apabila terjadi
perselisihan; dan
g. berperanserta pada upaya perlindungan dan pelestarian sumber daya air dalam
rangka konservasi lingkungan.
(3) Pemberian ganti rugi sebagaiman dimaksud pada ayat (2) huruf e diupayakan
berdasarkan penyelesaian di luar pengadilan atau melalui pengadilan.
(4) Upaya penyelesaian di luar pengadilan sebagaimana dimaksud pada ayat (3)
dilakukan dengan arbitrase atau alternatif penyelesaian sengketa sesuai dengan
peraturan perundang-undangan.

From the legal point of view, consumer has the right to receive the continuity, quality and quantity of water as prescribed by law. They should be compensated if these rights are interrupted or not fulfilled due to the negligence committed by water undertakers. GR 16/2005 above also prescribes that water undertaker must pay a decent compensation to consumer for the loss they sustained. Although GR 16 is not particularly clear on what it means by ‘loss’ but this is likely to be a term for ‘violation of service levels’. 

Hence, under the law, ‘whose fault’ is not really the question for consumer. GR 16 does not differentiate whether the fault lies on the part of the bulk water supplier (in this case, PT Jasa Tirta) or the treatment and distribution facility (in this case, Palyja or Aetra). What the law require is for the consumer to be compensated, irrespective of whose fault it is.

'Whose fault’ is more a question for the government. The government is the one responsible to provide accountability mechanism in response to the complicated structural arrangement in the water sector. The government should determine where the liability lies and direct the compensation fund from the liable party to consumer.

More in this issue: my interview with Kompas (in Bahasa). 

 

Related Posts:
14 Disturbing Facts about Jakarta's Water
Supreme Court Decision on Water Monopoly in Batam
Water companies duty to satisfy reasonable demands



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Where to complain for bad water services – a comparison

Tuesday, May 11, 2010

 

If you are in England, UK:

 

 

http://www.ccwater.org.uk/

Consumer Council for Water : Consumer Council for Water via kwout

 

 

If you are in Victoria, Australia:

 

 

 

If you are in Indonesia:

 

 

 

 

With one caveat however. The Indonesian Ombudsman does not deal particularly with water (or utilities issues). So I have no idea how they can help, especially when the service is privatized. Read my article here.

 

Related Posts:

 

Missing water and shadow users
Human Right Aspects of Private Sector Participation in the Water Sector
14 Disturbing Facts about Jakarta's Water
Water companies duty to satisfy reasonable demands

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Water companies duty to satisfy reasonable demands

 

 



Suppose you have just built a new home in a nice city. All your neighbours has water connection, unfortunately, the local water company refuse to extend their pipes into your property. Do you think they are acting against the law?

 

Before we argue on the basis of positive law, I will first raise the issue on what the law ‘should be’ : Do you think the law should obligate water companies to provide connections to consumer? To put it into other terms, can water companies refuse a connection request? If they can, under what basis?

 

The answer to the first question is ‘yes’. The reason is because water is a special kind of good. Many authors classify it into merit good and quasi public good, I do not wish to discuss this in a more detail. To illustrate, consider the differences of buying water from buying clothes. In buying clothes, you have a number of option, you can go either to debenhams, zara or marks & spencer. But for water, it is likely that you are stuck with only one company for the whole city. If that company refuses to trade, then you are doomed. This is what natural monopoly is all about in practice: consumer is stucked with few option or no option at all. Existing customer also find it difficult to exit from the market as no competitor is available in their local. So, unless the water company is regulated, they can do anything they want.

 

How should the law deals with this phenomenon?

 

The English Law obligates water companies to ‘satisfy reasonable demands’. This is what the Water Industry Act 1991 says:

 

Domestic connections
45Duty to make connections with main

(1) Subject to the following provisions of this section and to sections 46 and 47 below, it shall be the duty of a water undertaker (in accordance with section 51 below) to make a connection under this section where the owner or occupier of any premises in the undertaker’s area which—

(a)consist in the whole or any part of a building; or

(b)are premises on which any person is proposing to erect any building or part of a building,

serves a notice on the undertaker requiring it, for the purpose of providing a supply of water for domestic purposes to that building or part of a building, to connect a service pipe to those premises with one of the undertaker’s water mains.

(2)Where a notice has been served for the purposes of this section, the duty imposed by subsection (1) above shall be a duty, at the expense of the person serving the notice, to make the connection required by the notice if—

(a)the main with which the service pipe is required to be connected is neither a trunk main nor a water main which is or is to be used solely for the purpose of supplying water otherwise than for domestic purposes; and

(b)such conditions as the undertaker may have imposed under sections 47 to 50 below have been satisfied;

and, subject to section 51 below, that duty shall arise whether or not the service pipe to which the notice relates has been laid when the notice is served.

(3)A notice for the purposes of this section—

(a)shall be accompanied or supplemented by all such information as the undertaker may reasonably require; and

(b)if the notice has effect so that a requirement is imposed on the undertaker by virtue of section 46(4) below, shall set out the matters that have given rise to the imposition of that requirement;

but, subject to section 51(5) below and without prejudice to the effect (if any) of any other contravention of this subsection, a failure to provide information in pursuance of the obligation to supplement such a notice shall not invalidate that notice.

(4)The duty imposed on a water undertaker by this section shall be owed to the person who served the notice by virtue of which the duty arises.

(5)Where a duty is owed by virtue of subsection (4) above to any person, any breach of that duty which causes that person to sustain loss or damage shall be actionable at the suit of that person; but, in any proceedings brought against a water undertaker in pursuance of this subsection, it shall be a defence for the undertaker to show that it took all reasonable steps and exercised all due diligence to avoid the breach.

(6)Where a water undertaker carries out any works which it is its duty under this section to carry out at another person’s expense, the undertaker shall be entitled to recover from that person an amount equal to the expenses reasonably incurred by the undertaker in carrying out the works.

(7)Nothing in this section or in sections 46 to 51 below shall impose any duty on a water undertaker to connect a service pipe to any premises with a service pipe to any other premises.

(8)In the following provisions of this Chapter a notice served for the purposes of this section is referred to as a connection notice.

 

 

Now let’s see what the Indonesian Law ( Government Regulation 16 Year 2005) suggests:

 


Hak dan Kewajiban Penyelenggara
Pasal 68

 

(2) Setiap penyelenggara berkewajiban untuk:
a. menjamin pelayanan yang memenuhi standar yang ditetapkan;
b. memberikan informasi yang diperlukan kepada semua pihak yang berkepentingan
atas kejadian atau keadaan yang bersifat khusus dan berpotensi akan
menyebabkan perubahan atas kualitas dan kuantitas pelayanan;
c. mengoperasikan sarana dan memberikan pelayanan kepada semua
pemakai/pelanggan yang telah memenuhi syarat, kecuali dalam keadaan memaksa
(force majeure);
d. memberikan informasi mengenai pelaksanaan pelayanan;
e. memberikan ganti rugi yang layak kepada pelanggan atas kerugian yang
dideritanya;
f. mengikuti dan mematuhi upaya penyelesaian secara hukum apabila terjadi
perselisihan; dan
g. berperanserta pada upaya perlindungan dan pelestarian sumber daya air dalam
rangka konservasi lingkungan.
(3) Pemberian ganti rugi sebagaiman dimaksud pada ayat (2) huruf e diupayakan
berdasarkan penyelesaian di luar pengadilan atau melalui pengadilan.
(4) Upaya penyelesaian di luar pengadilan sebagaimana dimaksud pada ayat (3)
dilakukan dengan arbitrase atau

 

Sorry for non English speakers. Article 68(2) of GR 16/2005 regulates the  obligations of a water undertaker in Indonesia. Unfortunately, the obligations they owed is only towards existing customers. I am unable to find any provisions obligating the undertakers to extend their pipes to prospective customers. There is, however, a general obligation for the Regional Government to provide water services to citizens in their locale (See Art. 40.c).

 

Hence, if you complain why your water company refuse to extend their pipes to your newly erected building or homes, the law may not be on your side. Sorry :(

 

Related Posts:

Indonesian Water Services Suffering from a Lack of Governance

Supreme Court Decision on Water Monopoly in Batam 

Missing water and shadow users
Troubled Waters: Confronting the Water Crisis in Australia’s Cities (Free Ebook)
14 Disturbing Facts about Jakarta's Water


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The new electricity law

Friday, September 11, 2009

The House of Representative recently passed the new electricity bill. The bill is perceived by the media as a real attempt to liberalize the electricity sector in Indonesia. But is it true that the law is an attempt to liberalize the sector? How does the law protect investor?

Under the new law, electricity provision are segregated into generation, transmission, distribution and retail and the private sector is allowed to participate. The question is of course, in which segment can the private sector participate and what are the incentives, rights and obligation?

I will return with the discussion later. In the mean time, you can have a look at the new law here (in Bahasa).

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Indonesia needs a strong water services law

Monday, August 31, 2009

Following is my latest op-ed at the JP:


Indonesia Needs a Strong Water Services Law

Mohamad Mova Al `Afghani , Dundee , UK | Mon, 08/31/2009 11:56 AM | Opinion

The current condition in the water and sanitation sector is bleak. Only 31 percent of the urban population and 17 percent of the total population had access to piped water. Around 80 million Indonesians lack access to sanitation, contributing to 100,000 deaths annually and economic losses of up to US$6.3 billion.

The water law that was enacted in 2004 comprehensively regulates water as a finite natural resource. However, of all the law's 100 articles, only one (Article 40) specifically regulates water and sanitation services.

Meanwhile, the implementing regulation of Article 40, Government Regulation No. 16/2005 on the Development of Drinking Water Provision Systems (PP-16) regulates water and sanitation services only generally.

There are several possible reasons for this. The first is that the government perceives water services as a local problem and as such considers municipalities to be primarily responsible for water services. The second reason is that in order to avoid the law from being invalidated by the Constitutional Court, the Water Law does not regulate services specifically, but instead broadly and vaguely.

Indeed, the water law does not contain the word "privatization" but it does suggest at Article 40 that the "..private sector, as well as the cooperatives and other members of the society" may participate in the development of water services. Of course, some investment in water supply infrastructure can be small if they occur in rural areas.

However, in cities, water projects can be worth millions of dollars and involve multinational corporations and foreign lenders. It is certainly inadequate to regulate both these operations under the same article.

It is worth noting that the governance of water as a resource is different from water services, even though they are interrelated. The governance of water resources encompasses the management of groundwater, rivers, wetlands, lakes, catchments areas, effluent discharge and how water is allocated to competing interests such as the industrial, residential, farming and hydropower sectors.

The governance of water services is different as it deals with water supply and sanitation infrastructure (sewerage), as well as the rights and responsibilities these utilities have and what roles local government plays.

The interconnection between *services' and *resources' only comes where water is abstracted from the environment by the utility and returned to the environment as waste.

Due to the complexity of the governance of water services, some countries regulate them in a specific law. In the UK and Scotland, they are regulated under the Water Industry Act, and in South Africa they are regulated under the Water Services Act. France does not have any specific water services law, however, models of private participation are regulated explicitly through multiple legislations. These legislations, backed by the court, which can act as a quasi-regulator, explicitly acknowledges the legal relation between municipalities, consumers and concessionaire holders and regulates their rights and responsibilities.

The water services law has important functions for both consumers and investors. It protects consumers from disconnection or limitation of supply (in Indonesia, disconnection is allowed by PP-16, while in the UK and South Africa it is illegal to disconnect), it establishes a consultation mechanism for tariff setting, sets out transparency requirements and regulatory accounts, sets quality standards for drinking water and details consumer rights.

In Indonesia, the laws do not define what the "minimum standard of services" is, as it is defined in a contract. In many other jurisdictions, these standards are not subjected to market mechanisms through contracts but are a matter of statutory obligation. The reason for this is because a sub-standard service is a public health issue which requires state intervention.

Note that one of the functions of the water services law is guaranteeing the property rights of the water utility. Without sufficient regulation, investors mainly depend on contracts. The political character of water services sometimes presses local governments to assume control of some rights of utility providers, such as denying tariff increases, or even striping them off their concessions when they lose popular support.

The problem in Indonesia is that the government views private participation to be desirable in the water sector, but the Constitutional Court and the civil societies are very reactive to the idea. So the parliament and the government regulate privatization discreetly in order to avoid the wrath of the court and civil society.

In effect, privatization happens without adequate statutory oversight. This has strong implications for consumers and investors. For consumers, this means that their rights to enjoy good quality, uninterrupted water supply at an affordable rate and their rights to complain and to request compensation for substandard services is not legally guaranteed, but is simply a matter of private arrangements enumerated in a contract.

For investors, this means that their investment relies only in the mercy of local government in honoring their contract. If there is a dispute between the government and an investor, the court and tribunals will be left in the dark, as there are no clear rules that regulate the settlement of disputes. Hence, without a water services law, their investment will be at risk.

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Is Privatisation Irreversible?

Monday, August 17, 2009



I took this picture at the Edinburgh Train Station Yesterday (Aug 16, 2009)

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End of natural monopoly in the water sector?

Sunday, August 9, 2009

Michael Pritchard demonstrated his Lifesaver Bottle that can turn filthy water into drinkable water in a matter of second. The portable lifesaver filter is said to have 15 nanometer pores, small enough to filter viruses. The running cost to produce 25.000 litres of water through a Jerrycan equipped with Livesafer filter is 0.5 cents per day.

If the technology develops and applied to drinking water infrastructure, we may soon say goodbye to natural monopoly in the water sector. Treatment costs will go significantly low making any household eligible to build their own treatment facilities so long as water sources are available.







This could be a bad news for water companies of course :)

Regulations on water services will need to accommodate the possibilities for liberalising the water sector.

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Can public service law be applied to private sector?

Tuesday, July 14, 2009

Below is my recent Below is my recent op ed in Jakarta Post. Just a little typo at the 7th paragraph, it should read 'employer'.

Can public service law be applied to private sector?

Mohamad Mova Al Afghani , Jakarta | Tue, 07/14/2009 9:55 AM | Opinion

The House of Representatives passed the public services bill into law on June 23, 2009. The law can impose a variety of sanctions on public servants in the form of written warnings, removal from office, termination of employment and compensation to victims.

It stipulates recourse for violations of public service obligations (PSO) through the ombudsman offices, the House of Representatives and the administrative court. This law represents quite a breakthrough for bureaucratic reform.

As far as regulating government officials goes, the law is fairly strong. However, in sectors where services are privatized, it is unclear if and how this law is applicable.

Consider for example the administrative sanctions that can be given to an offender. If the case involves public officials, the law on civil servants can be used to prosecute, but this is not the case when the offender is private actor.

The law mandates that if the offender is not a civil servant, complaints must be directed to the government official who delegates the function of public service to the private actor — this is difficult.

If the offender is not a civil servant, their employment is regulated by the ordinary labor law and not the law on civil servants. The most an official can do upon receiving a complaint is to pressure the offender’s superior to take action, but the official cannot intervene in the process.

The accountability mechanism for the public and private sectors is also different. When a public official is involved, they are accountable to the House, because of his/her direct action in providing the service or through their custody of shares. This is not the case in the private sector, where employees are directly accountable to their shareholders and creditors – not politicians. Hence, recourse for the victim through the House is not relevant to private enterprise.

When public services are privatized, the relationship between private actors and the government is governed through private law. The role of public law is limited to licenses. If the government determines that private actors deliver substandard services, it can revoke their licenses.

However, license revocation does not automatically drive a private actor out of business. Private actors can sue the government in an administrative court in order to get their license back. While this process is underway, their revenue stream remains. This means that private actors can hire lawyers in their litigation against the government using public money.

In practice, license revocation rarely happens, especially if the service is vital and employs many people. The government will not risk revoking licenses for minor violations. As such, governance by licenses alone may not be efficient.

If so, then, how do PSOs extend to private parties?

The public service law, unfortunately, does not adequately address the private sector. This is discouraging, given the fact that the role of the state in providing goods and services is gradually decreasing. What the government should have done, and needs to do, is to create mechanisms that can hold private enterprises publicly accountable beyond the traditional administrative law.

In foreign jurisdictions, PSOs can be extended to cover private parties through contracts. This is known as public contracting. In general terms, public contracting means that the freedom of contract rule under general private law is constrained. A private actors’ maneuverability in stipulating provisions of a contract is limited. Any provisions which may obstruct the materialization of public service obligation will be deemed inapplicable.

In order to ensure PSOs are met when contracting to the private sector, the law can impose mandatory provisions in contract form. Conversely, the law can also prohibit private actors from conducting actions which would be detrimental to consumers.

Although there are similar legal principles in PSOs, as each industry has its own specificities, generic formulation is not possible. For example, prohibition of disconnection from services is a typical PSO for water and electricity companies, but would be irrelevant to a railway company. Similarly, cross subsidy obligations are relevant in the network industry, but that may not be the case in banking or healthcare.

The detail of PSOs for each industry should therefore be extrapolated on in sectoral regulations; the public service law can act as an umbrella regulation for each sectoral PSO. This means that a PSO for a water company should be detailed in terms of water acts and a PSO for an electricity company should be regulated by electricity acts.

The question remains whether the public service law will have an impact on incidents that occurred before it was enacted. The transitory provision of the public service law is silent on this matter. But if the answer is positive, preexisting contracts between private actors and the government which contain public service functions may need some adjustment.

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Public Service Law was passed by the House

Saturday, June 27, 2009

The House of Representative passed the Public Service Law last Tuesday (June 23). This law is expected to boost Indonesia's public service performance. The Law imposes sanctions to government officials in breach of public service obligations, in the form of warning, suspension and even termination of employment. An Ombudsman Commission will be set to monitor the implementation of this Law. Click here to view the final draft version of the law (In Bahasa)