INDONESIA 2011 – GENERAL & ELECTRICITY INFORMATION
1.1. Country overview
1.1.1 Governmental System
As in other democratic countries, the Republic of Indonesia applies the Trias Politica that recognizes the separation of the legislative, executive and judicial bodies. The legislative authority is under the People’s Consultative Assembly (MPR) that consists of two bodies namely the Parliament composed of members of political parties (DPR), and the Regional Representative Council (DPD) composed of representatives from each province in Indonesia. Each province is represented by 4 delegates that are elected by the people in the respective region.
The People’s Consultative Assembly (MPR) is the highest state institution. Upon the Amendment of the 1945 Constitution, the membership of the MPR starting the period of 1999-2004, was amended to include not only the members of the parliament (DPR) but also the members of the DPD. Formerly the MPR consisted of the parliament members and group representatives. Currently, the MPR has 550 members from the parliament and 128 members from the Regional Representative Council (DPD). The parliament members and the DPD members are elected every five years. Since 2004, the MPR has become a bi-chamber parliament with the DPD as second chamber.
The executive institution is centralized under the president, vice president, and the cabinet of ministers. The cabinet is a presidential cabinet in which the ministers report to the president and do not represent the political parties. Presidential election is also held every five years. Since 2004, president of the Republic of Indonesia is elected through direct election by the people.
The judicial institution - since the reform era and upon the amendment of the 1945 Constitution - is administered by the Supreme Court including the administration of the judges.
1.1.2. Geography and Climate
Indonesia is one of the largest archipelagos in the world that has 17,508 islands, situated between 6 degrees northern latitude and 11 degrees southern latitude and spreading from 97 degrees to 141 degrees eastern longitude and it is located between two continents – Asia and Australia/Oceania. This strategic position greatly influences the country’s culture, social, politics and economy.
Stretching along 3,977 miles between the Indian Ocean and the Pacific Ocean. Indonesia has a total area of 1.9 million square miles (4,92 million square kilometres) including the ocean. The water area is about two-third of total area.
The five large islands of Indonesia are: Sumatra covering 473.606 square km, Java with 132.107 square km, Kalimantan (the third largest island in the world) with an area of 539.460 square km, Sulawesi with 189.216 square km, and Papua with an area of 421.981 square km. Indonesia has 33 provinces (including 2 Special Territories of Nanggroe Aceh Darussalam and Yogyakarta) and one Special Capital Region of Jakarta (DKI).
The islands of Indonesia were formed in the Palaeocene age (70 million years BC); Eocene age (30 million years BC); Oligocene age (25 million years BC), Miocene age (12 million years BC), and Pleistocene age (4 million years BC). The Australian and Pacific tectonic plate have a great effect on the change of the islands. The Australian plate changes slowly with an upward movement into the small plates of the Pacific plate that moves southward. Between these lines, the islands of Indonesia are stretched out.
This makes Indonesia as one of the most changing geological area in the world. There are 400 volcanic mountains – which 100 of them are active- that dot the islands of Indonesia. Every day Indonesia experiences three vibrations, at least one earthquake a day and one volcanic eruption in a year.
Most of the islands are hot and humid throughout the year. Temperature ranges from 27.6° to 36.8° C during the day and from 14.6° to 24.6° C during the night. Humidity ranges from 63% to 83%. Rain falls primarily from December to March, when the winter monsoon dominates. Only western Java and the Lesser Sunda Islands have a dry season, from June to September.
Like in many rainy tropical areas, soils are predominantly infertile in Indonesia because of leaching. However, the soils of Java and adjacent islands such as Bali are more fertile. Soil nutrients are replenished by frequent volcanic eruptions, and the lava's alkalinity is conducive to plant growth. Java alone is home to 112 volcanoes, fifteen of which are still active.
Forests cover more than half of Indonesia's land area, which is mostly mountainous.
1.1.3 Demography
TABLE : POPULATION INFORMATION
| | Average ann. growth rate (%) | |||||||
| | 2000 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010* | 2006 to 2010 |
| Population (millions) | 206.3 | 220.6 | 223 | 224.67 | 227.34 | 229.36 | 237.6 | 1.09 |
| Population density (inhabitants/km2) | 113.9 | 121.7 | 123.1 | 124.02 | 125.49 | 126.94 | 131.2 | 1.09 |
| Urban population (% of total) | 42 | 48.1 | 49.2 | | | | | |
| Land Area(1000 km2) | 1811.6 | |||||||
Source: Statistic Centre Board
* Source: Statistic Centre Board
The results of the 2010 National Population Census also shows that Java and Madura Islands, which accounts for 7% of the total area, is resided by around 57,5% of the population (136 millions), while Maluku and Papua which account for 25% of the total area, are inhabited by 3% of the total population. The population density in other islands are as follow: Sumatera 21%, Sulawesi 7%, Population density of Java is thus around 1034 persons per square kilometres, Bali 690 persons per square kilometres, and Papua 8 person per square kilometres. Jakarta is the most crowded city with a population density near to 12,978 persons per square kilometres. The largest cities are Jakarta (the capital), Bandung, Surabaya, Semarang, Malang, Surakarta, and Yogyakarta, all of which are in Java, and Medan in Sumatra. The Statistics Indonesia published that the figure of population in 2006 was 222.7 millions, while the number for 2009 was projected to be 231.3 millions and 2010 is 237.6 millions.
According to the UNDP Human Development Report 2007/2008, the life expectancy at birth for all population of Indonesia is 69.7 years (2005) increased from 66.2 years in 2001. The Human Development Index trend of Indonesia is continuously increasing, and the value for 2005 is 0.728 which gives the country a rank of 107th out of 177 countries.
1.1.4 Economic Data
Indonesia had an average real gross domestic product (GDP) growth rate of 19.3 percent between 2005 and 2009 and during the period, the rate of poverty was reduced from 15.97 percent of the population to 13.33 percent with a significant improvement of the overall standard of living.
Indonesia Poverty Rate 2005-2010
Year Poverty rate (%)
2005 15.97
2006 17.75
2007 16.58
2008 15.42
2009 14.15
2010 (as of March) 13.33
TABLE : GROSS DOMESTIC PRODUCT (GDP)
| YEAR | Average ann. growth rate (%) | |||||
| | 2005 | 2006 | 2007 | 2008 | 2009 | 2005 to 2009 |
| GDP (millions of current US$) | 292,030 | 351,497 | 415,883 | 521,195 | 590,889 | 19.3 |
| GDP (millions of constant 2000 US$) | 184,296 | 194,434 | 206,771 | 219,191 | 229,155 | 5.6 |
| GDP per capita (current US$/capita) | 1,328.30 | 1,578.01 | 1,843.12 | 2,280.19 | 2,551.92 | 17.8 |
1.2 Energy Information
1.2.1 Estimated available energy
In 2009, Indonesia’s proven and potential reserves of oil and gas were about 8.00 billion barrels of oil and 159.63 TCF gas. This is a decline of 14% of oil reserves compared to that of 2001. At today’s rates production of around one million barrels per day, Indonesia’s current oil reserve has a life-time of about 24 years.
Hydropower has high potential energy resources but has not been effectively harnessed except in Java Island. The potential is estimated at 75,7 GWe, mini and with micro-hydro installed capacity it is 86 GWe: 17.2% of total identified potential are about a 500 MWe capacity. Java Island is almost fully harnessed with installed capacity of about 2.4 GWe. The highest potential energy resources of hydropower is around 25 GWe located in Papua Island.
Around 40% of the world's geothermal resources are located in Indonesia. The active volcanic belt in Indonesia, measuring 7,000 km in length and 50-200 km in width distributes geothermal energy resources along the volcanic lines of Sumatra, Java, Bali, West Nusa Tenggara (NTB), Northern Sulawesi and Maluku. Most of the geothermal energy resources are located at the base or old caldera area of volcanoes.
Indonesia's total geothermal energy potential is equivalent to 27,601 MW of electricity in which only 1 GWe is being utilized. Of this total, 11,135 MW is confirmed as probable reserve, 1,050MW as possible reserve and 2,288 MW as proven reserve. The remaining 13,128 MW are still speculative and hypothetical resources.
1.2.2 Energy policy
The President of the Republic of Indonesia issued a Presidential Regulation No. 5 of 2006 that outlined the National Energy Policy (NEP). This NEP is a comprehensive policy which covers both the supply and the demand-side policy. The NEP also underlines the need that energy conversion in all sectors has to be implemented immediately, not only to reduce the dependence on oil fuel, but also to diversify energy, alleviate poverty, increase economic growth, and promote environmentally-friendly development.
The aforementioned Presidential Regulation serves as the main guideline in the national energy management to achieve the security of domestic energy supply. This regulation sets a clear target of the share of each type of energy up to the year 2025, as follows: oil supply will be reduced to share only up to 20%, natural gas increases to 30%, coal should be more than 33%, and new and renewable energy sets at 17%. With a clear and consistent policy in creating much needed conducive investment climate, as well as with the support and participation of all national stakeholders, this target may be achieved. The Presidential Regulation also supports the development of various sources of energy, including new and renewable energy by the end of 2025. All aspects related to the resources, use and arrangement of energy in Indonesia has then been regulated by the Act No. 30 of 2007 on Energy, including new and renewable energy resources. According to this Act, among others, new energy resources can be produced by new technology, either from renewable or non-renewable energy such as nuclear for hydrogen, coal bed methane, liquefied coal and gasified coal. These new energy resources should be managed by the state and utilized for the prosperity of the people.
In addition to the Presidential Regulation No. 5/2006, the Indonesian Government also issued several other regulations and policies on new and renewable energy, such as Geothermal Law, Green Energy Policy, and Small Distributed Power Generation using Renewable Energy.
There are five main energy policy measures:
1. Diversification: to maximize and economize the supply of energy, to curb the rate of excessive use of hydrocarbon resources, to reduce the dependence on a single type of fuel (i.e. petroleum) and later to replace it with other available fuels. In 1995 oil shares was around 60%, and in 2020 is projected to be around 40%;
2. Intensification: to increase and expand the exploration of the available energy sources aiming to secure sufficient supply of energy;
3. Conservation: to economize energy production and utilization;
4. Energy Price: to formulate energy prices based on economic values and by taking into consideration its environmental cost;
5. Clean Energy Technologies: to support the environmental programme and towards a sustainable development.
The focuses of the energy policy are as follows:
1. Supporting national stability and fuelling macro economic recovery by ensuring the availability of energy in enough number and realistic price, which is efficient, safe, reliable and environment-friendly.
2. Conducting energy sector restructuring through regulation and legislation.
3. Improving the efficiency of the State-owned companies.
4. Improving bureaucracy efficiency.
5. Supporting the implementation of Regional Autonomy based on legislation and its rule of implementation.
The goals of the policy are outlined as the following:
1. Supporting to increase private companies' role in energy business that leads to establishing free market mechanism.
2. Reaching electrification ratio of 90% in the year 2020.
3. Increasing the share of renewable energy which consists of geothermal, biomass and micro/mini-hydro, to be at least 5% in the year 2020.
4. Increasing strategic partnership between domestic and international companies to explore and/or exploit energy source in the country and abroad.
5. Supporting domestic energy companies to "go international" to compete in global market.
6. Decreasing energy intensity to 1% per year so that the energy intensity becomes 3 BOE/ thousand USD, and its elasticity becomes less than 1 in the year 2025.
7. Increasing the domestic manpower share/role in energy industry so that the dependence on foreign companies and or manpower can be minimized.
The implementation of the energy policy covers several aspects such as the issuance of regulations, standards, energy-pricing incentives and disincentives, and the application of appropriate technologies. The technologies that would be considered are identified as follows:
1. Technologies to produce substitutes for oil, as oil are non-renewable and are a very limited resource.
2. Technologies to support a more sustainable energy supply.
3. Technologies for clean and efficient energy to support environmental programmes and towards sustainable development.
Nuclear energy is a viable option within an optimum energy mix to reduce dependence on fossil fuels. Furthermore, nuclear energy may provide a secured long-term energy supply as well as supporting the reduction of potential of air pollution.
According to the results of the study on the Comprehensive Assessment of Different Energy Sources (CADES) for Electricity Demand (2001-2002), it is reasonable to operate nuclear power plant in about 2016. The Act No. 17 year 2007 concerning the National Long-Term Development Planning 2005 – 2025 notes that utilization of nuclear power for electricity generation may be performed in this period.
1.3 The electricity system
1.3.1 Electricity policy and decision making process
The Indonesian power sector is ruled and regulated by the following law and government regulations:
1. Law No. 15 /1985 regarding electricity;
2. Government Regulation No. 3/2005 regarding amendment of the Government Regulation No. 10/1985 regarding electricity;
3. Ministerial Decree of the Minister of Energy and Mineral Resources (MEMR) No. 9/2005.
4. Ministerial Decree of MEMR No.10/2005.
When the law no. 20/2002 regarding electricity was revoked by the Supreme Constitutional Court (Mahkamah Konstitusi) in 2004, the former electricity law no. No. 15/1985 is to be enforced again to rule the Indonesian power sector. Under this law, PT PLN (Persero) is the sole holder of Pemegang Kuasa Usaha Ketenagalistrikan or PKUK (authority and obligation to supply electricity to all people in the whole country). With this authorization and obligation, PT PLN (Persero) is obliged to provide electricity to meet the national electricity demand.
The Directorate General of Electricity and Energy Utilization (DGEEU) under the Ministry of Energy and Mineral Resources is primarily responsible to formulate electricity policy and regulation. One responsibility of DGEEU is to prepare general national electricity planning to meet electricity power demand in a reliable and sustainable way. The National Electricity General Planning is an integrated policy in the electricity sector comprising projection of electricity demand and supply of power generation, investment and financing, utilization of primary energy resources, as well as new and renewable energy for power generation.
According to Act No. 15 on Electricity (1985) and the Government Regulation No. 26 on supply and utilization of power generation (2006), the electricity utility should undertake planning and have a general Power Generation Master-plan.
On August 1998, the Government of Republic of Indonesia has implemented a policy on restructuring of the electric power sector. The main target of this restructuring of the power generation industry, which was formerly a monopoly in nature, is to develop a competitive market, where the price of electric power is determined by market.
1.3.2 Structure of electric power sector
The structure of the current Indonesian electricity supply industry is shown in Figure 2. According to the law no. 15/1985, PLN - which is a state owned enterprise as well as a limited liability company - is the only authority in the country that provides electricity to all Indonesian people (PKUK). In serving the national electricity demand, PLN produces electricity from its own power plants, including from generator companies which are PLN’s subsidiaries. PLN also acts as the single buyer that purchases electricity from independent power producers (IPP). Other power producers apart from PLN and IPP are ’captive power’, mostly industries that produce power for self uses, and some other smaller companies including cooperatives that sell their electricity directly to consumers. PLN builds and owns most electricity infrastructure in the country. In term of generation facilities, PLN owns almost every kind of power plants, such as coal-fired and oil-fired steam power plants, gas turbine, geothermal, hydro electric, and diesel plants. Most of these generation facilities are under the management of two PLN’s subsidiaries, PT Indonesia Power and Java-Bali Electric Company (PT. PJB).
The structure of the current Indonesian electricity supply industry
In delivering electricity to its large, medium and small customers while maintaining the quality and reliability of service, PLN has developed extensive transmission and distribution networks, including the large scale interconnection power grid in Java-Bali system.
Furthermore, PT PLN established 5 subsidiaries and 1 joint venture as the following:
1. PT. Indonesia Power, whose main business is electricity generation. It was established on 3 October 1995 named PT PJB I that later became PT Indonesia Power on 1 September 2000.
2. PT. Pembangkitan Jawa Bali (PT PJB), whose main business is electricity generation. It was established on 3 October 1995 named PT PJB II. The name was changed to PT Pembangkitan Jawa Bali (PT PJB) on 22 September 2000.
3. PT. National Electricity Service of Batam Island (PT. Pelayanan Listrik Nasional Batam - PLN Batam), that engaged in business of electricity provision for public purposes in the Region Batam Island, was established on 3 October 2000.
4. PT. Indonesia Comnets Plus, whose main business is telecommunications business, was established on 3 October 2000.
5. PT. Prima Layanan Nasional Enjiniring (PT. PLN Enjiniring), a company on engineering, consultant, and construction supervision. It was established on 3 October 2002.
6. PT. National Electricity Service Tarakan (PT PLN Tarakan), a provider of electricity for public purposes in Tarakan Island of East Kalimantan.
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