Energy Sector in Full Speed Despite Pandemic
MINISTRY OF ENERGY AND MINERAL RESOURCES
REPUBLIC OF INDONESIA
PRESS RELEASE
NUMBER: 240.Pers/04/SJI/2020
Date: 15 July 2020
Energy Sector in Full Speed Despite Pandemic
The ongoing worldwide Covid-19 pandemic does not
slow down the performance of the Energy and Mineral Resources (EMR) sector. Despite
limitations, Minister of EMR Arifin Tasrif has answered the challenges of the
sector by making a number of strategic policies, among others, issuance of
revised Mineral and Coal Mining Law, conversion of diesel power plants to gas-fired
power plants, and the most significant one is the adjustment of natural gas
price for certain industries in order to increase national competitiveness and
economy.
"The mandate of Presidential Regulation Number
40 of 2016 on Natural Gas Pricing, for both the industries and the state
utility Perusahaan Listrik Negara (PLN), has been fulfilled; this will bring
about positive impacts on national economy," said Arifin in Jakarta on
Wednesday (15/7/2020).
There are 197 natural gas users from fertilizer,
petrochemical, oleochemical, steel, ceramic, glass, and rubber glove industries
that have enjoyed price adjustment to USD 6 per Million British Thermal Unit (MMBTU).
"The price cut is also applied to the
electricity subsector. Providing affordable electricity for the public will
also support industrial growth. This policy will not reduce the revenue of oil
and gas contractors, nor will it put additional burden on the state finance. Price
cut will benefit not only the energy sector but also other sectors such as petrochemicals,
ceramics, glass, and rubber gloves. It will improve the industries'
competitiveness," Arifin added.
Until the end of June, the volume of natural gas
which price has been adjusted, for both certain industries and electricity
generation, totaled 1,223.03 BBTUD.
New Mineral Law
The management of mineral and coal has
also entered a new era with the issuance of Law Number 3 of 2020 on Amendment
to Law Number 4 of 2009 on Mineral and Coal Mining. In addition to 51%
divestment certainty, mineral downstreaming to increase added value, and the
priority to offer mining area to State-Owned Enterprises (SOEs), this law is
expected to answer the challenge of environmental conservation.
Sanctions will be imposed if a holder of Mining Business License (IUP) and
Special IUP whose license is revoked or expires does not carry out reclamation/post-mining
activities or does not place reclamation/post-mining guarantee fund. Sanctions
include maximum imprisonment of five years and a maximum fine of Rp100 billion.
Besides the criminal sanctions, IUP and IUPK holders may be imposed additional
sanction in the form of payment of funds needed to fulfill the reclamation
and/or post-mining obligations. It is expected that there will not be any
abandoned mining pits and environmental pollution may be prevented.
Another regulation that supports the Mineral and Coal Law is a government
regulation, currently discussed with Ministry of Home Affairs, Coordinating
Ministry for Economy, and regional governments. The draft regulation will also
be discussed in various forum which will involve academics, business people as
well as associations.
"The Mineral and Coal Law has also taken into account the advice and
inputs from many parties in order to provide certainty of business and investment,
and to give maximum benefits for the country," Arifin said.
Clean Energy Development
Moreover, utilization of clean energy, especially for electricity generation, has continued to be improved. Conversion of diesel power plants to gas-fired power plants has reached a total capacity of 1.7 Giga Watt at 52 locations. Minister of EMR has assigned PLN to carry out gasification of power plants and to buy LNG from Pertamina in order to convert diesel fuel to Liquefied Natural Gas (LNG).
"The government has also set a target to replace all diesel power plants in the next three years," the Minister added.
Arifin has also assigned Pertamina to supply LNG and construct LNG infrastructure at every power plant operated by PLN to generate electricity. Pertamina must also price the LNG regasification gas at plant gate which will offer lower Electricity Generation Costs compared to using diesel fuel.
"The total saving
from the conversion is estimated at Rp3 trillion annually," the Minister
explained. He said that natural gas is one of Indonesia's energy backbones. Domestic
gas demands will increase; thus, gas utilization must be allocated to the
maximum.
More attractive price
To realize the target and encourage
investment in renewable energy, Arifin said that the government is formulating
the regulation about feed in tariff for
renewable energy.
"It's the
government's commitment to adopt the use of new, renewable energy, expand
utilization, and encourage investment in renewable energy. The regulation on
more attractive prices for renewable energy will be issued soon. This is to
ensure acceleration of renewable energy," he asserted.
Previously in late February 2020, the government issued EMR Ministerial
Regulation Number 4/2020 on changes in the policy of renewables utilization for
electricity generation. The regulation sets out the purchase of renewable
electricity through conditional direct appointment, adjustment of cooperation
scheme to Build, Own, Operate (BOO),
management of reservoir/irrigation hydropower plants developed by Ministry of
Public Works and Housing, assignment to develop municipal waste power plants, and
assignment to PLN to purchase electricity from renewable power plants which
were built by grant.
Indonesia has set a 23% target of renewables utilization in the 2025 energy mix.
This policy will be combined with the country's commitment to reducing
emissions by 29% in 2030. (IY)
Head of Bureau of Communication, Public Information Services, and Cooperation
Agung Pribadi (08112213555)