‘Indonesia’s energy industry underperforms in 2019’

13 January 2020

Indonesia’s energy industry saw shortfalls across most sectors in 2019 as the country faced economic uncertainties, from the general election at home to Brexit and to the United States-China trade war.

Data from the Energy and Mineral Resources Ministry released on Dec. 9, 2019 showed that investments totaling US$31.9 billion in the sector were significantly lower than the year’s target of $33.4 billion, as well as the $32.9 billion targeted the previous year.

The shortfall in energy investment corresponded with decreased investment in renewables, oil and gas and mining industries — in that order. Investments were on target and higher than the previous year only in the electricity industry.

“[The ministry] will no longer be a factory of rules, but a facilitator of industry growth,” Energy and Mineral Resources Minister Arifin Tasrif said, expressing his aim to stimulate investment in the industry. The ministry’s efforts toward this end included building infrastructure, deregulating the industry and improving electricity and natural resource supplies, he said.

The industry’s poor performance sets Indonesia back from its ambition to achieve a 23 percent renewable energy mix by 2025 and reducing the trade deficit caused by oil imports.

The ministry’s data recorded the steepest investment shortfall in the renewable energy industry with investments reaching $1.5 billion, 83 percent of the 2019 target and unchanged from 2018.

Due to limited funding, renewable energy generated 10,157 megawatts (MW) last year, lower than the 13,900 MW targeted in the National General Energy Planning (RUEN) road map.

The three biggest renewable energy projects that went online last year were all geothermal power plants: the 85 MW Muara Laboh plant, the 42.3 MW Sorik Marapi and the 55 MW Lumut Balai.

Renewable Energy Director General Sutijastoto reasserted that the directorate would focus on bioenergy development to meet Indonesia’s renewable energy target, and that the 30 percent biodiesel mix (B30) policy “will be continually escalated”.

The second steepest investment shortfall was recorded in the oil and gas industry with investments reaching $12.5 billion — 93 percent of the 2019 target and slightly lower than the previous year.

Ministry data shows that domestic ready-to-use production hit its lowest level in at least five years, producing 1.8 million barrels of oil equivalent per day (boepd), lower than the 2.02 million boepd target.

Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) head Dwi Soetjipto attributed the production shortfall to the forest fires in Sumatra that forced local production to halt temporarily, a natural decline in several oil and gas blocks and several oil spills.

Two of the spills were in areas operated by state-owned energy holding company Pertamina, but he pointed to Pertamina’s Mahakam Block in East Kalimantan as “the largest production shortfall”.

The third steepest investment shortfall was recorded in the mining industry with $5.9 billion, 95 percent of the target and lower than investments in 2018.

But the coal industry, the country’s largest mining export by volume, produced 610 million tons, far higher than the targeted 489 million tons. Production grew on the back of a 7.8 percent increase in domestic coal consumption to 138 million tons, mainly due to 10 new coal-fired power plants.

“The 2019 coal production was much higher because provincial mining companies significantly increased production,” said Coal and Mineral Director General Bambang Gatot Ariyono.

Meanwhile, electricity investments met last year’s $12 billion target to exceed investments of $11.3 billion in 2018.

Indonesia closed 2019 with 69.1 gigawatts (GW) in installed capacity, lower than the targeted 74.8 GW, but still 6.4 percent higher than 2018.

“Power production increased 4.2 GW from the previous year. That’s the highest increase we’ve achieved to this year,” said electrification director general Rida Mulyana.

Indonesia also achieved 98.9 percent electrification, up to par with the targeted 99 percent. East Nusa Tenggara ranks the lowest in electrification at 85 percent.

Source: The Jakarta Post, 13 January 2020