Before the Presidential Regulation Is Issued, the Coordinating Ministry for Downstreaming and Energy Transition Must Answer: Transition for Whom?
Jakarta — Publish What You Pay (PWYP) Indonesia questions whether bringing the downstreaming and energy transition agendas under a single coordinating minister will resolve the contradictions between the two, or merely conceal them.
On 1 October 2026, President Prabowo Subianto inaugurated Bahlil Lahadalia as the Coordinating Minister for Downstreaming and Energy Transition, pursuant to Presidential Decree No. 104/P/2026 concerning the Dismissal and Appointment of Ministers and Deputy Ministers of State of the Red and White Cabinet for the 2024–2029 period.
Bahlil will continue to serve as Minister of Energy and Mineral Resources (ESDM). As of now, the Presidential Regulation (Perpres) governing the structure, authority, and ministries to be coordinated by this new post has not yet been issued.
PWYP Indonesia considers that combining two agendas that remain in tension under a single nomenclature risks reducing the energy transition to a mere label rather than a measurable target. Two examples are already underway.
First, coal downstreaming that actually prolongs coal demand. The coal-to-methanol gasification project owned by Arutmin and KPC through PT Bumi Etam Chemical, which held its groundbreaking ceremony on 31 August 2026 in East Kutai, requires approximately 7.7 million tonnes of low-calorie coal per year. The project has an investment value of US$2.5 billion, with production targeted to begin by the end of 2029.
Second, nickel downstreaming is powered by coal-fired captive power plants. According to data from the Center for Research on Energy and Clean Air (CREA) and Global Energy Monitor, operating captive coal-fired power plant capacity reached 19.3 GW in 2025 and could exceed 31 GW when projects under construction and in planning are included. Its expansion is concentrated in nickel industrial areas in Central Sulawesi and North Maluku.
Meanwhile, national coal production reached 836.1 million tonnes in 2024, more than twice the 400-million-tonne ceiling set out in the National Energy General Plan (RUEN) under Presidential Regulation No. 22/2017.
“Combining the energy transition with downstreaming that still relies on coal, whether through coal gasification or coal-fired captive power plants for nickel smelters, risks trapping us in a false solution. 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 power generation within 15 years, and expressed optimism that Indonesia could achieve net-zero emissions before 2050. Those commitments are difficult to measure when the same position is also promoting projects that lock in coal demand for the long term,” said Aryanto Nugroho, National Coordinator of PWYP Indonesia.
Three Roles in One Hand: Who Checks Whom?
With this appointment, Bahlil holds three roles that are closely intertwined:
- Minister of Energy and Mineral Resources, overseeing the upstream sector and licensing.
- Coordinating Minister, who, according to Bahlil, will coordinate relevant ministries and agencies, including the Ministry of Investment and Downstreaming.
- Chair of the Task Force for the Acceleration of Downstreaming and National Energy Security, established under Presidential Decree No. 1/2025, which is tasked with identifying strategic projects and resolving their obstacles.
As Minister of Energy and Mineral Resources, he also serves as the Executive Chairman of the National Energy Council (DEN) pursuant to Law No. 30/2007. Bahlil has placed the Coordinating Ministry’s office at the Ministry of Energy and Mineral Resources because, according to him, 90 percent of downstreaming investment is concentrated in the ESDM sector.
“When the regulator, coordinator, and party responsible for accelerating projects are the same person and operate from the same building, there is no internal layer to scrutinize decisions when downstreaming targets come into conflict with transition targets. This is a governance design problem,” said Aryanto.
The Problem Is Economics, Not Coordination
PWYP Indonesia considers the main obstacle to coal downstreaming to be project economics, rather than weak coordination. In May 2025, the Directorate General of Mineral and Coal recorded seven companies required to undertake downstreaming that were still facing obstacles: Arutmin, KPC, Adaro, Kideco, Multi Harapan Utama, Tanito Harum, and Berau Coal. Industry players themselves have called for economic feasibility guarantees.
A zero-percent royalty incentive for coal volumes used in value-added activities may be granted under the Job Creation Law and Government Regulation No. 25/2021, but the implementing ministerial regulation has yet to be issued. Following a meeting at the House of Representatives on 6 May 2025, Director General of Mineral and Coal Tri Winarno stated that the incentive “may be granted, but may also not be granted,” depending on the project’s economic feasibility.
“The Coordinating Ministry does not solve the problem of economic feasibility. The risk is that this position could become a channel for expanding incentives, from zero-percent royalties to easier license extensions, so that economically unviable fossil projects appear viable. The cost would be borne by the state through lost royalty revenues,” said Aryanto.
Transition for Whom?
PWYP Indonesia highlights the absence of the terms “just” or “just transition” in the ministry’s nomenclature, while the emphasized mandate is acceleration and execution. PWYP Indonesia warns that a transition pursued solely for speed, without planning for justice, will shift the burden onto the most vulnerable groups.
In the nickel sector, the fragility of downstreaming jobs is already visible. Since 5 August 2026, PT Gunbuster Nickel Industry in North Morowali has begun phased layoffs affecting approximately 1,900 of its 6,325 workers, amid a debt moratorium process (PKPU). In nickel industrial areas in Morowali and Halmahera, surrounding communities bear the impacts of deforestation, air and water pollution, and violations of Indigenous peoples’ rights.
In the coal sector, if the plan to phase out coal-fired power plants within 15 years is implemented, regions whose finances depend on revenue-sharing funds (DBH) and coal royalties will need an economic transformation plan. Coal downstreaming does not address this need, as it merely postpones the transition. A PWYP Indonesia study disseminated on 27 November 2025 at the discussion “Restructuring Indonesia’s Coal Sector within a Just Energy Transition Framework” recommended:
- A moratorium on new licenses;
- Measurable and transparent production-reduction targets in national energy planning;
- Support for the diversification of coal-mining businesses;
- Regional economic mapping and worker retraining.
“An energy transition pursued solely for speed will shift the burden onto those who are most vulnerable: smelter workers who may lose their jobs when companies come under financial pressure, coal-producing regions that do not yet have post-mining economic plans, and communities at the project sites that bear the burden of pollution. From the outset, the Coordinating Ministry needs to answer one question: transition for whom?” said Ariyansah NK, Researcher at PWYP Indonesia.
Value Addition That Cannot Yet Be Scrutinized
Constitutional Court Decision No. 202/PUU-XXIII/2025 holds that the allocation of Mining Business License Areas (WIUP) for downstreaming purposes must prioritize increasing value addition and meeting domestic supply chains before serving global supply chains. However, the criteria, assessors, list of applicants, and results of the assessment of priority WIUPs have not been made publicly available.
“Nickel downstreaming is often described as a success, but the public still cannot examine how much value added actually remains in the country. Without measurable indicators and transparent processes, the Constitutional Court’s interpretation regarding domestic supply chains cannot be effectively monitored,” said Wicitra Diwasasri, Researcher at PWYP Indonesia.
PWYP Indonesia’s Demands
PWYP Indonesia urges the government to ensure that the Coordinating Ministry for Downstreaming and Energy Transition operates with the following commitments, and that the Presidential Regulation establishing the ministry clearly defines its authority:
- A roadmap that distinguishes downstreaming projects that lock in fossil-fuel dependence from projects that genuinely reduce domestic emissions, in line with the plan to phase out coal-fired power plants within 15 years and achieve net-zero emissions before 2050.
- Measurable indicators for value addition and domestic supply chains, as a means of implementing the interpretation set out in Constitutional Court Decision No. 202/PUU-XXIII/2025.
- A just transition plan for workers, affected communities, and coal- and nickel-producing regions. The plan should include post-mining regional fiscal planning, worker protection and retraining, beneficiary data, grievance mechanisms, and meaningful participation of women, Indigenous peoples, and persons with disabilities from the planning stage.
- Disclosure of the form and value of downstreaming incentives for each project, including the status of the zero-percent royalty arrangement.
- Publicly accessible and downloadable emissions data from captive coal-fired power plants in industrial areas.
- Written boundaries of authority among the Coordinating Ministry, the Ministry of Energy and Mineral Resources, the Ministry of Investment and Downstreaming, the Coordinating Ministry for Economic Affairs, and relevant task forces, as well as a transparent priority WIUP process covering the criteria, assessors, list of applicants, and assessment results.
Contacts:
Wicitra Diwasasri, Researcher, PWYP Indonesia — wicitra@pwypindonesia.org
Ariyansah NK, Researcher, PWYP Indonesia — ariyansah@pwypindonesia.org