Ministry of Energy and Mineral Resources Optimistic Electric Investment of IDR 536 Trillion in 2024

Electricity sector investment shows a positive graph in 2019. This sector is able to suck up investment of 12 billion US dollars. This figure exceeds the target set and is higher than the year 2018 which incised the figure of 11.29 billion US dollars. The government is optimistic that by 2024 investment in this sector will increase to US $ 39 billion or equivalent to IDR 536 trillion.

The Ministry of Energy and Mineral Resources (ESDM) ensures that it will optimize domestic consumption of natural gas starting in 2020. This certainty is evidenced by the signing of the Head of Agreement (HoA) between the State Electricity Company (Persero) and PT Pertamina (Persero) regarding the supply and development of Liquefied Natural Gas (LNG) infrastructure for PLN’s power plants.

The signing of the HoA is a follow-up to the Decree of the Minister of Energy and Mineral Resources Number 13K / 13 / MEM / 2020 concerning the Assignment of the Implementation of the Supply and Development of LNG Infrastructure and the Conversion of the Use of BBM with LNG in the Provision of Electric Power.

ESDM Minister Arifin Tasrif, who witnessed the signing, stressed that this cooperation will reduce the amount of imports and fuel consumption while increasing PLN operational efficiency.

This cooperation is part of the follow-up to the legal umbrella decision that has been established through Decree of the Minister of Energy and Mineral Resources Number 13 K / 13 / MEM / 2020 concerning the Assignment of the Implementation of the Supply and Development of LNG Infrastructure and the Conversion of the Use of BBM to LNG in the Provision of Electric Power.

The emphasis of the regulation was motivated by the condition of Indonesia’s oil and gas trade balance. The Central Statistics Agency (BPS) recorded oil and gas commodities minus 1.18 billion US dollars in January 2020.

Through the HoA, diesel power plants are targeted to be converted into natural gas with a total capacity of around 1.7 Giga Watt in 52 locations.

As is known, the Minister of Energy and Mineral Resources Decree (Kepmen) No. 13K / 13 / MEM / 2020 assigns Pertamina to carry out the supply and development of LNG infrastructure in the supply of electricity by PLN at each power plant

The decree also assigned PLN to carry out the gasification of power plants and the purchase of LNG from Pertamina in the context of converting the use of Diesel to LNG. In addition, Pertamina is required to provide gas prices resulting from regasification of LNG at the plant gate which will result in a Lower Cost for Electricity Supply compared to using Diesel.

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