Compensation in Rural Electricity and Free Electricity Installation Contract

Abstract

According to Article 33 subsection 3 Constitution of Republic of Indonesia 1945, everything regarding natural resources lies within the territory of Republic of Indonesia was governed, managed and distributed by the state with its management institution for people welfare. In order to attain this objective, government has made policies to improve people’s welfare. One of these policies was fair distribution of electricity in all regions such as rural electricity and free electricity installation. Government was working together with private party to realize this goal. Legal base for both developments was by using selected contract to choose the implementer of this cooperatives work between government and private party under the contract of goods/service provision. This contract was different than any general contract because not only contract or private law was valid but so as several constitutional regulations for public law. The contract was a standard formal contract made exclusively by the government and private party could only approve or disapprove such contract. Another difference was in the compensation section. In any general contract, compensation was arranged by civil law and those breaching the contract can be filed to fulfill its default, but this was not happening for contract where government was one of the party involved. Although government acts as legal institution but regarding compensation the government was limited by constitutional regulation and thus could create unfairness for private party. Therefore clarity in constitutional regulation and such contract was necessary to avoid any loss and if it still occurs, all related parties would gain legal assurance regarding their loss.

Keywords: government contract, policy program of rural electricity and free electricity installation, compensation