- Rationale
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(N) Indonesia is in the grip of an unprecedented financial, economic, and social crisis that calls for radical and decisive reforms to restore domestic and international investor confidence. Bank assistance during 1999 will be guided by the short-term interim strategy formulated in response to the crisis. This strategy stresses assisting the Government in implementing major economic policy and institutional reforms, and mitigating the social distress spawned by the crisis. Bank support of the Government's initiative for structural reforms in the power sector is considered essential given the urgent need for reforms to overcome the inefficiencies resulting from over-regulation and inappropriate financial policies, whose adverse impact on the sector was less apparent during periods of high and sustained growth. Without the reforms envisaged under the Program, the electricity supply industry, which is reeling under the impact of the crisis, cannot survive. Ensuring a stable supply of electricity is essential for the country's economic recovery. The Program provides a sound basis for the Government to carry out reform and restructuring of the power sector.
- Objectives and Scope
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(R) The objective of the Program is to establish a competitive market for electricity in Java-Bali which will increase economic efficiency of the power sector in that region. The Program identifies five key areas of activities that will be necessary to achieve its restructuring objectives, (i) restructuring the power sector and creating an enabling environment for a competitive electricity market, (ii) establishing competition in the supply of bulk electricity in Java-Bali, initially with a single buyer and by 2003 with multiple buyers and multiple sellers, (iii) setting tariff and ensuring financial viability of PLN and newly-created subsidiaries during the transition period, (iv) increasing private sector participation, (v) strengthening the regulatory environment, including protecting the interest of the end consumers.
- Policy Dialogue
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(N) The Program supports the Power Sector Restructuring Policy announced by the Government of Indonesia on 25 August 1998.
- Environment Category:
C
- Environment Impact and Mitigation
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- Social Aspects and Remedies
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- Benefits and Beneficiaries
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- Public Consultation
- Arranged by
- Date for Consultation :
- Groups Consulted :
- Beneficiary Participation in Formulation
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- Beneficiary Participation in Implementation
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- Consulting Services
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(R) Consulting services will be required under the associated technical assistance loan.
- Procurement
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None.
- Contacts
- Bank
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- Executing Agency
- Ministry of Finance
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Contact Person
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Mr. Tunggul Hutomo, Head, Sub-Directorate IV, Mine
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Tel. No.
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381-3049/384 8294
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Fax. No.
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384-3712
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E-mail
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Contact Person
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- Remarks
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Projects 
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