DEVELOPMENT OF

DRAFT- NATIONAL ENERGY POLICY

SECRETARIATE GENERAL OF NATIONAL ENERGY BOARD

0 Jakarta, 3rd December 2012

CONTENT OF EXPLANATION

1. JOBS OF THE NATIONAL ENERGY BOARD

2. MECHANISM FOR SPECIFICATION OF THE

NATIONAL ENERGY POLICY

3. CURRENT STATUS OF KEN DRAFT

4. DIRECTION OF NATIONAL ENERGY POLICY

(In the perspective of energy resistance for

sustainable economy)

5. CONCLUSION

1

2

Jobs of National Energy Board (DEN) (Article 12 of Law 30 / 2007)

1. To Prepare and Formulate the National Energy Policy

(KEN)

2. To Specify the National Energy General Plan (RUEN)

3. To Decide the Measures for Coping with Energy Crisis

and Emergency

4. To Conduct Supervision of Energy Policy

Implementation

3

MECHANISM FOR SPECIFICATION OF R-KEN INTO KEN

FORMULATION OF RKEN DRAFT (By AUPK and AUP)

KEN DRAFT DISCUSSED IN MEMBERS

SESSION

SPECIFICATION OF DRAFT OF KEN INTO R-KEN

DISCUSSED IN THE PLENARY SESSION

THE GOVERNMENT PRESENTS R-KEN DRAFT TO DPR FOR

OBTAINING APPROVAL

KEN DRAFT IS SPECIFIED INTO KEN BY THE

GOVERNMENT

Y/N NO

Y

BACKGROUND

National

Energy

Resistance

High Growth of energy requirement

Low guarantee of energy supply

Declining reserves of fossil energy

Fossil energy still as export commodity

Inefficient management, low efforts of environ-ment conservation and preservation

EBT utilization is still not optimal

Capacities of research & development, industry & infrastructures are still not optimal

People’s low access to energy

Price is still not economically appropriate

Buffer reserves are not available yet

Kondisi Energi

National Energy Policy

Condition of world geopolitics and global environment issue

5

Government:

- Ministry

- Regional Government

NATIONAL ENERGY POLICY

Wantimpres

National Innovation Committee

BUMN/Other Institutions

University

Association/NGO

International Energy

Institutions/Representatives of

Friendly Nations

RPJPN

Economic Affairs

Regional Autonomy

Social Culture

Transportation

Infrastructure

Industry

Layout and Area

Agriculture

Forestry

Research, Development & Technology

Environment

STRATEGIC INSTITUTIONS AND ASPECTS IN R-KEN FORMULATION

STATUS of KEN DRAFT

a. R-KEN formulation has been prepared by the Board Members (AUP and Members of

Stakeholder Elements);

b. The 1st Plenary Session of the National Energy Board was organized on 7th March

2012, directed by the President of RI as Chairman of DEN and attended by DEN

Members (7 Ministers, 6 Stakeholder Elements, and Coordinating Ministers as invited

persons), with the results of:

‒ Direction of President on R-KEN

‒ Responses of Coordinating Ministers on R-KEN

‒ Explanation of Ministers as Members of DEN on R-KEN

c. As the follow-up of the 1st Plenary Session, R-KEN has been improved by observing

the President’s direction and the ministers’ responses;

d. R-KEN was agreed by all DEN members (AUP and AUPK) in the 8th Members’

Session on 28th May 2012, and further the 2nd Plenary Session will be organized to

ratify R-KEN to be presented to DPR-RI;

e. Further, R-KEN will be discussed by Panja of Committee VII DPR-RI and for obtaining

the approval of DPR-RI;

f. R-KEN is specified by the Government to become KEN after approval of DPR-RI.

KEN DRAFT

DIRECTION OF NATIONAL ENERGY POLICY

7

KEN DRAFT: OBJECTIVE OF NATIONAL ENERGY POLICY

Objective of national energy policy: to materialize energy

resistance and independence in order to support sustainable

national development, by:

a. Change of paradigm in energy management;

b. Independence in energy management;

c. Securing energy availability domestically;

d. Optimization of energy resources management;

e. Efficiency of energy utilization;

f. Increasing energy access;

g. Developing the capacity and independence in energy

technology and industry;

h. Creating employment opportunity;

i. Preserving environment functions.

ASSUMPTION OF ECONOMY AND POPULATION

• Population based on projection of UI’s demographic institution • Economic growth aligned with MP3EI

2010 2015 2020 2025 2030 2040 2050

Populasi

Indonesia Juta 238 250 261 271 280 299 307

Pertumbuhan Rata-rata % 1,5 1,0 0,9 0,8 0,7 0,7 0,3

Populasi Dunia [Skenario Shell] Juta 6900 7284 7650 8011 8300 8850 9200

GDP [Pendapatan Domestik Bruto]

GDP Nominal miliar USD 711 1335 2416 4257 6793 12989 20169

Per Kapita USD 2987 5340 9257 15708 24261 43441 65697

Pertumbuhan Rata-rata % 6,6 13,4 12,6 12,0 9,8 6,7 4,5

Uraian Satuan

Tahun Proyeksi

Note: Academic Manuscript prepared in 2009 - 2010

Projection Year

Unit Description

Population

Average Growth

World Population (Shelf Scenario)

Average Growth

Per Capita

Nominal GDP

GDP (Gross Domestic Income)

KEN DRAFT:

TARGETS OF REQUIREMENT – SUPPLY OF ENERGY and

ELECTRICITY until 2050

Energy Elasticity < 1 (in 2025)

Electricity Ratio close to 100% (in 2020)

TARGET UNIT 2015 2020 2025 2050

Supply of Primary Energy MTOE 215 290 400 1.000

Consumption of Primary

Energy per Capita TOE 0,9 1,1 1,4 3,2

Supply of Power Plant

Capacity GW 49 79 115 430

Consumption of electricity

per capita KWh 832 1308 2.500 7.000

KEN DRAFT: TARGETS OF ENERGY MIX until 2050

2030

Oil 20

Gas 15

Coal 25 Oil 19,4

Gas 18,8

Coal 31

Oil 49,7

Gas 20,1

Coal 24,5

2010 2025

2050

(%)

NRE 5,7

NRE 40

NRE 30,9

5.7

15.0

25

30.9

40

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2010 2020 2025 2030 2050

%

Oil

Gas

Coal EBT

Note: RE: hydro, geothermal, biomas, waste, biofuel, solar, sea, and wiNd NE: nuclear, hydrogen, CBM, coal liquefaction, and coal gasification

Oil 25

Gas 20 Coal 30

NRE 25

KEN DRAFT:

DIRECTION OF NATIONAL ENERGY POLICY

1. Energy Availability

2. Priority of Energy Development

3. Utilization of National Energy Resources

4. National Energy Reserves

5. Conservation and diversification

6. Environment and Safety

7. Price, Subsidy and Incentive

8. Energy Infrastructure and Industry

9. Energy Research and Development

10. Institution and Financing

KEN DRAFT (IN PERSPECTIVE OF ENERGY RESISTANCE FOR SUSTAINABLE ECONOMY)

a. Related to Energy Availability:

To change the paradigm of energy management

To increase exploration of energy resources, potential and/or proven reserves

To increase energy production and energy domestic and foreign sources

To reduce until ceasing the export of fossil energy gradually

To materialize balance between the addition speed of fossil energy reserves and the production speed

To prioritize local energy resources

To minimize the use of natural oil

To maximize the use of renewable energy

To optimize utilization of natural gas and new energy

Development of energy intensive industry in areas rich of energy resources.

To prepare buffer reserves and strategic energy reserves for securing long-term energy resistance

b. Related to Accessibility (Access):

To prioritize energy supply to people who have hade no access to energy

Development and confirmation of energy infrastructures (responsibility of Government and/or Regional Government)

Development and confirmation of energy infrastructures by:

‒ increasing the capacity of domestic industry in the supply of energy infrastructures;

‒ minimizing disparity of electric energy supply outside Java by regionalization of electric energy supply;

‒ developing support infrastructures of coal industry, covering transportation, stockpiling and blending

‒ conducting acceleration in supplying the oil and gas production support infrastructures (fuel refinery, transportation and distribution of energy, transmission system)

‒ acceleration of new and renewable industry support infrastructures.

Development of energy infrastructures shall consider the geographical condition of Indonesia (by strengthening the infrastructures of exploration, production, transportation, distribution and transmission in areas of islands)

Strengthening energy industry development in the frame of accelerating the achievement of targets of energy supply and utilization, national economy strengthening and absorption of employment opportunity

c. Related to Acceptability (Public Acceptance) :

The management of national energy is harmonized with the direction of sustainable national development, natural resources preservation, energy resources conservation, and environment pollution control.

The management activity shall consider factors of health, work safety, and social impacts while maintaining the environment functions.

The activity of energy management applies reduction of wastes production while considering its social, environment and economic aspects.

Any undertaking of nuclear installation shall observe safety and risk of accident.

d. Related to Affordability (ability to pay):

The price of energy is fixed based on the value of justified economy, which reflects the cost of energy production, environment cost, conservation cost and the profit studied based on the people’s buying power

The calculation of renewable energy price with the assumption for competing with energy price from natural oil energy sources

To materialize the coal market regulated by regulating domestic coal price by the Government until an efficient market has been established

The government materializes the regulated electric power market

The government regulates the renewable energy market, including the minimum quota of electric power, liquid fuel and gas originated from new and renewable energies

The subsidy is provided by the Government and Regional Government.

In case the application of justified economy and people’s affordability is unable to perform, the Government and Regional Government shall provide the subsidy.

In case the price of renewable energy is more expensive than the price of energy from non-subsidized oil fuel, the Government shall provide the subsidy.

Reduction of BBM and electricity subsidy is conducted gradually until people has reached the affordability.

KEN DRAFT (IN PERSPECTIVE OF ENERGY RESISTANCE FOR SUSTAINABLE ECONOMY)

CONCLUSION 1. The national energy policy is intended to materialize energy resistance and energy independence to support the

national sustainable development; 2. A sustainable economic growth could only be materialized by the support of energy resistance and energy

independence; 3. The target of economic growth (as specified in MP3EI) could only be reached if supported by adequate energy

supply capacity, by considering energy elasticity; 4. The target of energy elasticity in 2025 reaches 1, it means that the achievement of a certain economic growth

must be supported by preparing energy with the energy growth equal to economic growth; 5. The targets of energy requirement and electricity supply in the future are projected by assuming that in 2025

Indonesia will become a new advanced country, therefore the targets of energy requirement and the supply of power plant capacity in 2025 are projected as follows:

a. The consumption of primary energy per capita increases 3x in 2025 (from 0,4 MTOE/annum today to 1,4 MTOE/annum in 2025);

b. Electricity consumption per capita increases 5x in 2025 (from 591 Kwh/per capita today to 2500 KWh/annum in 2025);

c. Primary energy supply increases 2,5x in 2025 (from 162 MTO today to 400 MTOE in 2025) d. The supply of power plants increases over 3x in 2025 (from 35 GW today to 115 GW in 2025)

6. If the targets of energy and electricity supply and utilization specified by KEN Draft can be achieved, in 2025 Indonesia will become a new advanced country (equal to OECD countries in 2005).

7. The detailed implementation of the targets specified in KEN Draft is formulated in the National Energy General Plan prepared by the Government.

SECRETARIATE GENERAL OF NATIONAL ENERGY BOARD

4th fl. Badiklat ESDM Building, Jl. Jenderal Gatot Subroto Kav 49

Jakarta Selatan

Tel. (+6221) 52921621

Fax. (+6221) 52920190

www.den.go.id

THANK YOU