The Energy Regulation and Markets Review - Stikeman Elliott

Indonesia
The accelerated electricity development programme consists of several different
types of power plant: 4.3GW steam power, 3.6GW geothermal power, 1.6GW steam gas
power, and 1.2GW micro hydro power.
The total number of power plants currently being developed by PT PLN and
IPPs is equivalent to 29.4GW. The 10GW second-phase acceleration programme should
continue the 10GW first-phase programme so it can cope with an average annual
electricity demand growth of around 7 per cent.
Further, Presidential Regulation No. 13 of 2010 provides support for publicprivate
participation by establishing PT Sarana Multi Infrastruktur and its subsidiary PT
Infrastruktur Financing, to play the role of a fund to support infrastructure financing.
The government also supported the electricity industry by establishing PT Penjaminan
Infrastruktur Indonesia to provide guarantees for infrastructure projects, including in
the electricity sector.
During the past 12 months regulations issued by the MEMR have been geared
to support the use of gas and geothermal energy as sources of power generation. These
regulations cover the price of electricity from geothermal power plants, allocation of gas
for power plants, and supporting geothermal power plant developments based on the
second acceleration programme in power plant development.
VII
CONCLUSIONS and OUTLOOK
The 2006–2025 National Energy Policy, the Energy Blueprint 2008–2027, and the
laws governing electricity, oil and gas and mining will need to have detailed guidelines
and action plans – such as strict energy performance standards and financial incentive
schemes – to ensure successful implementation.
A further step towards ensuring a secure and sustainable energy sector would
be for Indonesia to continue its policy of reducing fossil fuel subsidies and shift them
towards green subsidies. The government’s effort to shift its energy policy is being
implemented through policies that support private investors in the energy sectors
and working together on a bilateral level as well as with private agencies to prepare a
sustainable working environment. Securing domestic supply of fuel for power generation
and providing a mechanism for risk allocations for investment show a trend towards
supporting the market in terms of legal framework.
Although the government has the necessary ministries and agencies in place for
effective energy policymaking and implementation, the coordination, decision making
and overlapping or unclear division of responsibilities among these institutions remain
serious issues. Complication also stems from the decentralisation of some administration
to the regional governments.
Delays on progress in projects already in the pipeline may occur due to the 2014
Presidential Election.
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