Indonesia’s Energy Policy Briefing

The document examines Indonesia's energy landscape from 2015 to 2020, highlighting the volatility of fuel and LPG subsidies and the severe disruption caused by COVID-19. It details the financial strain on state-owned enterprises PT Pertamina and PT PLN, the government's continued reliance on coal despite climate commitments, and the regulatory hurdles facing renewable energy. Key policy shifts include new fuel pricing formulas and a restructuring plan for PT PLN to focus on distribution over generation.

• The COVID-19 pandemic caused a significant decline in energy demand and revenue, with PT Pertamina's revenues anticipated to shrink by 38–45% and nationwide average fuel sales dropping by 35% since March 2020.
• Transport fuel subsidies have trended upward since 2018, though the government maintained prices through May 2020 despite falling international prices due to a new pricing formula and PT Pertamina's obligations to purchase more expensive local fuel.
• LPG subsidies increased from IDR 25.87 trillion in 2015 to IDR 58.14 trillion in 2018, driven by demand and international prices; however, reform efforts to target subsidies via biometric technology and poverty databases have failed to be implemented.
• The coal sector faced a severe downturn due to COVID-19, with exports in January and February 2020 falling 44.35% compared to the previous year, leading the government to provide fiscal incentives to the mining sector.
• Indonesia's commitment to reduce carbon emissions by 29% by 2030 is questioned by NGOs due to MEMR Regulation No. 7/2020, which simplifies licensing and provides incentives for coal mining.
• PT PLN is facing financial distress due to declining electricity demand and the burden of the 35,000 MW program, leading the government to consider renegotiating contracts with independent power producers (IPPs) and restructuring PT PLN to focus on distribution.
• While MEMR Regulation No 4/2020 improved renewable energy investment attractiveness by abolishing the Build Own Operate Transfer (BOOT) scheme, the primary obstacle remains the electricity tariff, which is still benchmarked against cheap coal costs.

APA

Suharsono, A., & Lontoh, L. (2020). Indonesia’s Energy Policy Briefing. International Institute for Sustainable Development. https://www.iisd.org/system/files/2020-08/indonesia-energy-policy-briefing-july-2020-en.pdf

Chicago

Suharsono, Anissa, and Lucky Lontoh. Indonesia’s Energy Policy Briefing. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/2020-08/indonesia-energy-policy-briefing-july-2020-en.pdf.

Wikipedia

{{cite report |last1=Suharsono |first1=Anissa |last2=Lontoh |first2=Lucky |title=Indonesia’s Energy Policy Briefing |publisher=International Institute for Sustainable Development |date=July 2020 |url=https://www.iisd.org/system/files/2020-08/indonesia-energy-policy-briefing-july-2020-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{suharsono2020indonesias, author = {Suharsono, Anissa and Lontoh, Lucky}, title = {{Indonesia’s Energy Policy Briefing}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = jul, url = {https://www.iisd.org/system/files/2020-08/indonesia-energy-policy-briefing-july-2020-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }