PWYP argues that combining the downstreaming and energy transition agendas must be accompanied by clear divisions of authority, emissions-reduction targets, and measurable, transparent indicators of added value.
Bahlil holds dual positions as Coordinating Minister for Downstreaming and Energy Transition and Minister of Energy and Mineral Resources. PWYP warns that coal-based downstreaming could hinder the energy transition.
KABARBURSA.COM – The consolidation of downstreaming and energy transition agendas under Bahlil Lahadalia has raised questions about the direction of Indonesia’s energy policy. Publish What You Pay (PWYP) Indonesia argues that, without clear divisions of authority and performance indicators, the policy risks prolonging dependence on coal rather than accelerating the transition to clean energy.
Bahlil currently serves as the Coordinating Minister for Downstreaming and Energy Transition and as the Minister of Energy and Mineral Resources (ESDM). President Prabowo Subianto appointed him as coordinating minister on October 1, 2026, under Presidential Decree No. 104/P/2026.
However, the Presidential Regulation (Perpres) governing the structure, authority, and ministries to be coordinated by the new ministry has yet to be issued.
PWYP Indonesia National Coordinator Aryanto Nugroho argues that placing downstreaming and energy transition under the same institutional umbrella does not necessarily resolve the tensions between the two agendas. Instead, the arrangement risks reducing the energy transition to a mere label unless the government establishes measurable targets.
“Combining the energy transition with downstreaming that still relies on coal, whether through gasification or coal burned in captive power plants supplying nickel smelters, risks trapping us in false solutions. At the G20 Summit in Rio de Janeiro in November 2024, the President announced plans to phase out coal-fired power plants and fossil fuel-based power generation within 15 years, while expressing confidence that Indonesia could achieve net-zero emissions before 2050. That pledge is difficult to measure when the same portfolio is promoting projects that lock in coal demand for the long term,” Aryanto said in an official statement, as quoted on Friday, October 9, 2026.
PWYP points to two examples that illustrate these contradictions. First, coal downstreaming projects that sustain demand for fossil fuels. Second, the development of the nickel industry, which continues to rely on captive coal-fired power plants.
In its press release, PWYP stated that the coal-to-methanol gasification project developed by Arutmin and KPC through PT Bumi Etam Chemical requires approximately 7.7 million tonnes of low-calorie coal annually.
The US$2.5 billion project broke ground on August 31, 2026, in East Kutai and is targeted to begin production by the end of 2029.
In the nickel sector, PWYP cited data from the Center for Research on Energy and Clean Air (CREA) and Global Energy Monitor, which recorded 19.3 gigawatts (GW) of operational captive coal-fired power plant capacity in 2025.
This capacity could exceed 31 GW if projects under construction and in the planning stage are included. Expansion is concentrated in nickel industrial zones in Central Sulawesi and North Maluku.
PWYP also highlighted Indonesia’s national coal production, which reached 836.1 million tonnes in 2024. This figure was more than double the 400-million-tonne limit stipulated in the National Energy General Plan (RUEN) under Presidential Regulation No. 22/2017.
Beyond the direction of energy policy, PWYP questions the governance framework when several strategic functions are controlled by a single official.
According to the coalition, Bahlil holds three interrelated roles: Minister of ESDM, responsible for the upstream sector and licensing; coordinating minister, overseeing relevant ministries and agencies; and Chair of the Task Force for the Acceleration of Downstreaming and National Energy Security, established under Presidential Decree No. 1/2025.
As Minister of ESDM, Bahlil also serves as Executive Chair of the National Energy Council under Law No. 30/2007. PWYP further notes that Bahlil has located the coordinating ministry’s office within the Ministry of ESDM, citing his statement that 90% of downstreaming investment is concentrated in the energy and mineral resources sector.
Aryanto argues that concentrating regulatory, coordination, and project-acceleration functions in a single official could weaken internal checks and balances, particularly when downstream targets conflict with energy transition objectives.
“When the regulator, coordinator, and official responsible for accelerating projects are the same person working in the same building, there is no internal layer of oversight to scrutinize decisions when downstreaming targets clash with energy transition goals. This is a governance design problem,” Aryanto said.
PWYP therefore argues that the Presidential Regulation establishing the coordinating ministry must clearly define the division of authority. Without clear boundaries, projects could be accelerated without adequate oversight mechanisms.
PWYP also argues that the obstacles facing coal downstreaming are not merely a matter of interministerial coordination but also concern project economics.
The coalition cites a record from the Directorate General of Mineral and Coal in May 2025 stating that seven companies continued to face difficulties meeting their downstreaming obligations: Arutmin, KPC, Adaro, Kideco, Multi Harapan Utama, Tanito Harum, and Berau Coal. According to the document, industry players had requested guarantees of project economic viability.
One instrument under scrutiny is the zero-percent royalty incentive for coal used in value-added processing activities.
PWYP states that this incentive is permitted under the Job Creation Law and Government Regulation No. 25/2021, although the implementing ministerial regulation had not yet been issued at the time the information was compiled.
Following a parliamentary meeting on May 6, 2025, Director General of Mineral and Coal Tri Winarno stated that the incentive “may be granted, but it may also not be granted,” depending on the project’s economic viability.
Aryanto warns that establishing a coordinating ministry does not automatically make an economically unviable project viable. He also highlights the risk of excessive incentives being used to sustain fossil fuel-based projects.
“A coordinating ministry does not resolve questions of economic viability. The risk is that this portfolio could become a channel for additional incentives, ranging from zero-percent royalties to easier permit extensions, making unviable fossil fuel projects appear viable. The cost is borne by the state through lost royalty revenue,” Aryanto said.
PWYP also questions who will benefit from and bear the costs of the energy transition. According to the coalition, accelerating policies without equitable planning risks shifting the burden onto workers, communities surrounding industrial zones, and regions dependent on coal.
In the nickel sector, PWYP cites the situation at PT Gunbuster Nickel Industry in North Morowali. According to the press release, the company began implementing phased layoffs on August 5, 2026, affecting approximately 1,900 of its 6,325 workers amid proceedings to suspend debt payment obligations (PKPU).
The coalition also highlights environmental impacts in the nickel industrial zones of Morowali and Halmahera, including deforestation, air and water pollution, and issues concerning Indigenous Peoples’ rights.
Meanwhile, the planned phaseout of coal-fired power plants within 15 years requires preparation for coal-producing regions that remain dependent on revenue-sharing funds and royalties. Without economic diversification, these regions could face fiscal pressure as the coal industry contracts.
PWYP argues that coal downstreaming does not resolve these challenges because it risks merely postponing the transition. The coalition calls for a moratorium on new permits, measurable and transparent production reduction targets, diversification of coal mining businesses, and economic mapping and retraining programs for workers in affected regions.
PWYP Indonesia researcher Ariyansah NK emphasizes that the energy transition must account for its impact on the most vulnerable groups.
“An energy transition pursued solely for speed will shift the burden onto those who are least able to bear it: smelter workers who may lose their jobs when companies come under financial pressure, coal-producing regions without post-mining economic plans, and local communities exposed to pollution. This coordinating ministry must answer one question from the outset: a transition for whom?” Ariyansah NK said.
Beyond energy and employment issues, PWYP questions the transparency of data on the added value that actually benefits the domestic economy.
The coalition refers to Constitutional Court Decision No. 202/PUU-XXIII/2025, which interprets the priority allocation of Mining Business License Areas (WIUP) for downstreaming as requiring domestic value addition and fulfillment of domestic supply chain needs to take precedence before meeting global supply chain demand.
However, PWYP states that the criteria, assessors, applicant lists, and evaluation results for priority WIUP allocations remain unavailable to the public.
PWYP Indonesia researcher Wicitra Diwasasri argues that transparency is necessary to ensure claims of downstreaming success can be scrutinized based on the economic benefits that actually remain in Indonesia.
“Nickel downstreaming is often described as a success, but the public cannot yet examine how much of the added value actually stays in the country. Without measurable indicators and transparent processes, the Constitutional Court’s interpretation regarding domestic supply chains cannot be effectively monitored,” Wicitra said.
PWYP’s Six Demands to Clarify the Downstreaming–Energy Transition Agenda
PWYP urges the government to ensure that the new coordinating ministry operates within clearly defined boundaries of authority and pursues downstreaming without obscuring energy transition targets.
The coalition puts forward six demands.
First, the government must distinguish downstreaming projects that lock in fossil fuel dependence from projects that genuinely reduce domestic emissions. The roadmap must also align with the planned phaseout of coal-fired power plants within 15 years and the target of achieving net-zero emissions before 2050.
Second, the government must establish measurable indicators for domestic value addition and supply chains as a follow-up to Constitutional Court Decision No. 202/PUU-XXIII/2025.
Third, the government must prepare a just transition plan for workers, affected communities, and coal- and nickel-producing regions. This plan should include post-mining regional fiscal planning, worker protection and retraining, beneficiary data, grievance mechanisms, and meaningful participation by women, Indigenous Peoples, and persons with disabilities from the planning stage.
Fourth, the form and value of downstreaming incentives for each project, including the regulatory status of the zero-percent royalty incentive, must be disclosed to the public.
Fifth, emissions data from captive coal-fired power plants in industrial zones must be publicly accessible and downloadable.
Sixth, the government must establish a written division of authority among the Coordinating Ministry for Downstreaming and Energy Transition, the Ministry of ESDM, the Ministry of Investment and Downstreaming, the Coordinating Ministry for Economic Affairs, and relevant task forces. The priority allocation process for WIUP must also be transparent, including its criteria, assessors, applicant lists, and evaluation results.
For PWYP, the consolidation of downstreaming and energy transition can only be considered successful if the government demonstrates that increased value addition goes hand in hand with emissions reductions, worker protection, transparent governance, and greater economic benefits for the Indonesian public.
Source: Kabar Bursa