HOW CAN INDONESIA RE-ESTABLISH ENERGY INDEPENDENCE … fileHOW CAN INDONESIA RE-ESTABLISH ENERGY...

BY: SATYA W. YUDHA MEMBER OF COMISSION VII, DPR RI

HOW CAN INDONESIA RE-ESTABLISH

ENERGY INDEPENDENCE IN A

GROWING ECONOMY ?

35th Annual IPA Conference and Exhibition 2011, May 19, @ Satya W Yudha

Whats Indonesia facing now

Fuel Subsidy

Shifting Paradigm

From Global value chain to National value chain

Revising Law No. 22/2001 on Petroleum and Natural gas

Curent status of the process of revising Law No. 22/2001 in

the parliement

OUTLINE

Article 33, UUD 1945 “ Natural resources controlled by the state and used as possible for people's welfare”

3

WHAT’S INDONESIA FACING NOW

TOWARD SELF SUFFICIENT ENERGY POLICY


Source: Kedaulatan Rakyat NewsPaper, 17/7/2009

WHAT’S INDONESIA FACING NOW..

4

MORE than 7500 villages w/o Electricity


INDONESIA TOWARDS NATIONAL ENERGY INDEPENDENCE ???

5

LACK OF DOMESTIC

SECURITY OF SUPPLY

NO FSRT – YET

LACK OF INFRASTRUCTURE

IN BALANCE PRICE

AFFORDABILITY


OIL DEPENDENCYSHORTAGE OF SUBSIDIZED FUEL

10


HAVE NOT SEEN YET SIGNIFICANT RESULTS FROM ALTERNATIVE ENERGY SOURCES & NON-CARBON BASED

G E O T H E R M A L

M INI/ MICRO HYDRO

C B M

11


ENERGY SUBSIDY BASED ON STATE BUDGET REVENUE 2011

Total Oil & Gas revenue 209.9 trillion (IDR) = 20 billion USD

Fuel subsidy: 38.59 MioKL (2010:36.77 MioKL) = 95,914 trillion(IDR) = 9.3 billion USD

Electricity Subsidy= 41,2 trillion(IDR) = 4 billion USD

Challenges;

Control the Subsidy

FUEL Subsidy v/s Gas and Coal

Create the pricing scheme which is viable for the Development of Renewable Energy such as Geothermal, Mikrohydro, nuclear, etc

1. Geothermal to be used for electricity

(Law No. 27/2003 and President DecreeNo. 4/2010 “ceiling price US$ 9.7

cents per kWh, Ministerial Decree –PLN should be the off taker with the price of 9.7 cents/kWh)

2. Lesson Learned from Bio Fuel policy

50

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Pe

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2002

2003

2004

2005

2006

2007

2008

2009

2010-R

2011APBN

Penerimaan Migas Penerimaan Non-Migas

PENDAPATAN NEGARA

Ta hun 2000 - 2011 (APBN)

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DEFISIT APBN

Ta hun 2001 - 2011 (APBN)

14


SHIFTING PARADIGM

Oil to Gas → reducing the subsidy of Oil

(more cleaner burning fuel)

Industry should follow the Energy

Revenue Based toward Economic Growth Based

Transforming from Global Value Chain to National Value Chain

Improve Domestic Gas Price

Promoting Renewable Energy in the energy mix strategy for 2030

Should be

reflected

on the

revision of

Law No. 22/2001

Transforming from Global Value Chain to

National Value Chain


LNG BUSINESS STRUCTURE

Gas Trading Company offers umbrella of business

operations (purchase LNG / sell gas, storage and regas)

REGASIFICATIONFACILITIES

GASPRODUCTION

LIQUEFACTION SHIPPING PIPELINEGAS MARKET

LNGPLANT

EXISTING +NEW CUSTOMER

PLNLNG

Separate Downstream Activity – JVC buys LNG and sells

gas to consumers (PLN)

Upstream Activity – LNG sale to Joint Venture Co. (JVC)

LOADING REGAS

L N G

17


GLOBAL VALUE CHAIN V/S NATIONAL VALUE CHAIN

“Old Paradigm”

Govt takes :

• Lifting (Gol

equity gas)

•Taxes

GOI

BPMIGASPSC

INVESTOR

(PI HOLDER)

Investor:

• IRR

•RoI

Through

Lifting

• Operatorship

• Financing

• Offtaker

• EPC for the LNG Facility

• Transportation

The LNG is dedicated to foreign buyers (mainly Japan)

Paradigm Shifting

Energy IndustryGoes to

where the

industry is

located

Indonesia

Offshore

“New Paradigm”

Balanced Benefits

• Operatorship

• Financing : participation of national banks in

cooperation and with the support of Credit Agencien

and Commercial banks

• Offtaker: while maintaining the continuity of LNG

supply to the overseas buyers, the portion of DMO

will propel the national economy -

• EPC for the LNG facility: encourage participation of

national companies + transfer of knowledgeEngine of

Growth

Relocation of industrial base and

its supporting industries to

Indonesia

Domestic Infrastructure Opportunities

• Domestic Transporation

•Receiving Plant

•Regasification

•Pipeline

Multiplayer

Effect

Overseas

Consumption

Domestic Need w/improving

Domestic price

DMO

ishould be

aligned

with

financing

INDUSTRY ENERGY Power Plant

(gas fired)

Inbound Foreign Direct

InvestmentGreen Energy (Blue Sky)

Growth is supported by

sustainable primary

energy supply

Fuel

Tapping DMO volumes to strengthen

Indonesia in the global economy

Power – the fuel for growth

Project Financial Landscape Selected Sectors Profile Base Model Our Role & Synergy Key Indicators

GOI

BPMIGAS

PSCINVESTOR

(PI HOLDER)

Indonesia Indonesia

Offshore


LEGAL BASIS OF THE INDONESIA ENERGY UTILIZATION

Law No. 22/2001, on Petroleum and Natural Gas;

Law No. 30/2007 on Energy;

Law No. 4/2009 on Mineral and Coal Mining

Law No. 27/2003 on Geothermal

Law No. 30/2009 on Electricity

Law No. 32/2009 on Environmental Management an Protection

Law No. 10/1997 on Nuclear Energy

Law No. 22/2001, on Petroleum and Natural Gas;


LOOKING BACK..

Law No. 8

/1971

Law No. 22

/ 2001

11 YRS 30 YRS 10 YRS - PRESENT

Colonial Law

Indische Mijn

Wet 1899

Law No.

44/Prp/ 1960

Law No. 15

/1962

Before

Independence

ECONOMICAL CHALLENGES

POLITICAL INFLUENCE

NATIONAL INTERESTS

???

UUD 1945, Pasal 33


LAWMAKING PROCESS IN THE PARLIEMENT

The bill can be

submitted by the

Member, the

Commission, the

Joint Commission or

the National

Legislative (Baleg)

The bill proposed by

the Commission

which first

stipulated in the

Commission

meeting

establish

conceptions of the

bill by Baleg

The bill proposed

by the proponent /

Commission to the

Chair of the House

of Representatives

The Bill presented in

Plenary Session

Approved

Approval with

Changes, Parliament

gives assignment to

the AKD to make

changes

Not Approved

Plenary Session Legitimated the

bill from the House (Bamus)

and gives assignment to the

Comission, Joint Comission,

Baleg, Pansus and or Badan

Anggaran to continue to a

discussion process (next level)

Discussion at the House of

Representatives

Discussion stage 1

Discussion Stage 2

The HouseChairman to submit

the bill to the President with a

request that the president

appoints the ministers who will

represent the President to

conduct discussions with the

House

•The Bill submitted

by Comission VII

DPR

(June 2010)

The bill proposed by

the Commission

which first

stipulated in the

Commission

meeting (2010)

• Naskah Akademik

•Pandangan Fraksi

•The Bill presented in

Plenary session

Targetted Week-1

June 2011


Recommendation from Panitia

Angket BBM 2009 (Fuel Inquiry

Committee 2009)

2009

has listid in the Program Legislasi Nasional (Prolegnas)

2009-2014 (National Legislation Program 2009-2014)

2010

June

A joint meeting between commission 4, 5, 6, and 7 of the House of Representatives with

the Coordinating Minister for Economic Affairs, Minister of Energy and Mineral Resources,

Minister of Industry, Minister of Trade, and Minister of State Owned Companies, have

agreed to immediately revise Law No 22 / 2001 on oil and natural gas

Draft Law Preparation:

• Naskah Akademik

(Academic Scripts)

• Views from Fraction

IPA IATMI IGA IAGI

Kurtubi

ESDM

BPMIGAS

BPHMIGAS

PERTAMINA

KADIN

FKDPMProf

Wijayono

TN Manmud2011

TIME LINE ..

it is proposed to the Plenary Meeting of the

Parliament for approval as Draft Oil and Gas

June(week-1)

Discussion Draft Revised Oil and

Gas Law in Comission VII

JulyMay

(9-21)

Finalize Draft Revised Oil and Gas

Law by the Parliament Secretariat

General PUU Team

Submission Draft Revised

Law to Comission VII

(23)

Konsinyering Draft by PUU team (

Secretariat General of the Parliament

) and the Commission VII

(30-31)

2 term of sessions (each

session approximately

within 3 months period

(within 6

Months)

Harvard Kennedy School & FEUI Forum, May 10, @ Satya W Yudha

THANK – YOU !

16

HOW CAN INDONESIA RE-ESTABLISH ENERGY INDEPENDENCE … fileHOW CAN INDONESIA RE-ESTABLISH ENERGY...

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