20081031-IEA-Energy_Policy_Review_Indonesia_2008_Review_242页_3mb

Energy Policy Review of Indonesia Summary

Core Content

The Energy Policy Review of Indonesia is a comprehensive assessment of the country's energy sector conducted by the International Energy Agency (IEA) in collaboration with the Indonesian Ministry of Energy and Mineral Resources (MEMR). The review highlights key challenges and opportunities in Indonesia's energy policy, focusing on areas such as pricing, subsidies, investment, regulation, energy efficiency, and renewable energy development.

Main Points

1. Indonesia's Energy Context

• Indonesia is the fourth most populous nation in the world with 240 million people spread across over 6000 islands.
• The population is concentrated in Java-Madura-Bali, which accounts for 80% of the total population.
• Indonesia has transitioned from a central planned system to a democratic market-oriented economy.
• The country has experienced strong and stable economic growth of 5–6% annually since the Asian financial crisis (1997–99).

2. Energy Sector Challenges

• Fast-rising domestic energy demand and declining oil and gas production are major concerns.
• Subsidies on fuel and electricity have been a long-standing issue, distorting market prices and reducing government revenue.
• The energy sector needs reforms in pricing, investment, and regulatory frameworks to support sustainable development.

3. IEA Review Approach

• The review was conducted by a team of IEA member country specialists.
• It draws on IEA member country experiences and best practices to offer policy recommendations.
• The review includes findings and recommendations across six priority areas:
  • Progressive reduction in fuel and electricity subsidies.
  • Better policy implementation.
  • Improving the investment framework.
  • Enhancing the effectiveness of energy regulators.
  • Promoting a sustainable development agenda, especially renewable energy and energy efficiency.

4. Key Stakeholders and Institutions

• The Ministry of Energy and Mineral Resources (MEMR) is the central authority for energy policy.
• The Centre for Energy and Mineral Resources Data and Information (PUSDATIN) played a crucial role in providing consistent and reliable data.
• Several state-owned and private energy companies, including PT Pertamina, PT PGN, Chevron Indonesia, and Medco Energy, were involved in the review.
• Regulatory bodies such as BP MIGAS (for upstream) and BPH MIGAS (for downstream) are central to the sector's governance.
• Other relevant ministries include Finance, Trade, Forestry, and Environment, highlighting the cross-sectoral nature of energy policy.

5. Energy Sector Overview

• The energy sector is a key contributor to Indonesia's economy, with significant GDP and trade contributions.
• The sector includes oil, gas, coal, electricity, and renewable energy.
• Electricity generation and distribution are critical, with a focus on tariff reform, infrastructure investment, and rural electrification.
• Nuclear power is also part of the energy mix, with the National Atomic Energy Agency (BATAN) and Nuclear Energy Regulatory Agency (BAPETEN) playing central roles.

6. IEA Collaboration and Support

• The IEA provided technical and financial support to the review process.
• Member countries such as Japan, Netherlands, New Zealand, and the USA contributed expertise and funding.
• The review team included experts from various fields, including energy policy, trade, investment, and environment.

Key Information

• The review was conducted during a 2007 mission to Jakarta and included subsequent consultations with the Indonesian government and stakeholders.
• The IEA has a long-standing role in international energy policy, with 28 member countries and non-member participation.
• The review process was supported by data from PUSDATIN, which has been working to harmonise energy data across the country.
• The Executive Summary outlines six key areas for reform, emphasizing market liberalisation, regulatory independence, and sustainable development.
• The IEA aims to support Indonesia's energy transition and promote international cooperation in energy policy and technology.

Structure of the Review

The review is divided into 13 chapters, covering:

• Government policy, structure, and process
• Investment and trade
• Energy and environment
• Energy efficiency and conservation
• Renewable energy
• Upstream oil and gas
• Downstream oil
• Downstream gas
• Coal
• Electricity
• Nuclear power
• Energy research, development, and training

Conclusion

The IEA Energy Policy Review of Indonesia is a key reference for understanding the country's energy challenges and opportunities. It highlights the need for reform in subsidies, regulation, and investment, and encourages the adoption of sustainable energy practices. The review underscores the importance of international cooperation and policy learning between IEA member countries and non-member nations like Indonesia.

Recommendations

• Reduce fuel and electricity subsidies to align with international market prices.
• Improve policy implementation and coordination across government agencies.
• Clarify the investment framework to attract more private and foreign investment.
• Enhance the independence and authority of energy regulators.
• Promote energy efficiency and conservation as part of national policy.
• Develop a sustainable energy agenda, with a focus on renewable energy and clean technologies.

Acknowledgements

The IEA acknowledges the cooperation of MEMR, PUSDATIN, and other government agencies in providing data and insights. It also thanks IEA member countries for their expertise and financial contributions. The review team and support staff are also acknowledged for their efforts in producing the report.