The Visions and Missions in the sector of energy of the two Indonesia’s presidential candidates have been presented. Both candidates Prabowo and Joko Widodo apparently have not paid much attention to the inclusion of the calculation of budget in the energy sector.

Both presidential candidates should have clearly emphasized their respective priorities in the energy sector of the country to make the development of the sector can be more measurable in term of costs.

Both presidential candidates have to estimate the costs required for any plans they will make. Energy should be in line with economy. There should be an economic measurement so that the would-be elected President can later on implement his plan in the next five years.

Both pairs of the presidential candidates were in “miss-budgeting” when exploring their visions and missions as seen from what they have campaigned by simply making ideas and promises that in fact cannot be implemented and realized.

Here are the analyses of the visions and missions of both pairs of presidential candidates:

No. Prabowo-Hatta Pair Jokowi-Jusuf Kalla Pair
1 Regulation, Resistance and Law Enforcement Aspect
  1. To prevent and prosecute environmental polluters and protecting biodiversity and flora and fauna as assets of the nation.
  2. To build energy and natural resources sovereignty by way of returning national oil & gas management in accordance with Article 33 of 1945 Constitutional by completion of Oil & Gas Law revision.
  1. To safeguard interest and security of Indonesian maritime, especially state borders, maritime sovereignty and natural resources. To increase special security efforts for maritime sovereignty for preventing illegal fishing by securing transportation lanes for prosecuting various illegal activities including illegal logging and illegal mining
    • Environmental law enforcement;
    • Guaranteeing legal certainty and right to own land, resolution of land disputes and to oppose criminalization on revendication land right of the people;
    • Driven by revision of Oil & Gas Law very soon before the problem is getting chronic based on Article 33 of 1945 Constitution with spirit of TRISAKTI.
2 Corruption Eradication in Natural Resources Sector
  • Still general in nature and has not yet been specific in natural resources and living environment sectors.
  1. Planning breakthrough strategies for maintaining and increasing petroleum production in short term or long term and running strategy through:
    1. To prolong the span of production wells and re-increase declining oil production by using an accurate and consistent technology for instance Enhanced Oil Recovery (EOR) technology.
    2. To plan exploration activities that calibrating between high risk and withdraw investment so that it can be funding by the government or private,
    3. flexible fiscal system is needed in accordance with character of oil field, for example by determining investment feasibility aspect such as net present value (NPV), internal rate of return (IRR), payback period and profitability ratio (PR).
    4. Government should give administration priority in the investment development process and oil & gas resources development.
  2. To commit for reaching strong and solid oil & gas industry through developing strong and good oil & gas industry in short term or long term, optimizing State Budget fund through lifting and formulating reserve replacement strategy.
  3. State income portion from mining outcomes should increase gradually.
Aspect of Production and State Income from Natural Resources Sector
To overcome leakage in the state budget, but still general in nature, not specific yet in natural resources and living environment sector.
  1. Planning breakthrough strategies for maintaining and increasing petroleum production in short term or long term and running strategy through:
    1. Tto prolong the span of production wells and re-increase declining oil production by using an accurate and consistent technology for instance Enhanced Oil Recovery (EOR) technology.
    2. To plan exploration activities that calibrating between high risk and withdraw investment so that it can be funding by the government or private,
    3. Flexible fiscal system is needed in accordance with character of oil field, for example by determining investment feasibility aspect such as net present value (NPV), internal rate of return (IRR), payback period and profitability ratio (PR).
    4. Government should give administration priority in the investment development process and oil & gas resources development.
  2. To commit for reaching strong and solid oil & gas industry through developing strong and good oil & gas industry in short term or long term, optimizing State Budget fund through lifting and formulating reserve replacement strategy.
  3. State income portion from mining outcomes should increase gradually.
Energy Infrastructure Development
Erecting petroleum refineries, ethanol plant and DME (LPG replacement) plant and gas receiving terminal infrastructure and gas transmission/distribution network either by state owned enterprises or private.
  1. Developing oil & gas infrastructures such as oil refineries in Indonesia for meeting the national needs. Commit to give incentive to private for boosting participation in the national energy infrastructures development.
  2. Developing oil & gas infrastructures in transportation field based on local energy and cheap, infrastructures in the field of transportation based on local energy and cheap, SPBG (gas filling station) and supporting infrastructure in upstream or downstream such as refineries, storage, transmission pipes and tanker vessels for reducing the dependence on foreign countries and in order to be able to be utilized as much as possible in the interest of domestic.
Energy Subsidy
  1. To reduce oil fuel subsidy especially toward the haves through tax and duty, and developing energy subsidy system that is more target accurate and more fair.
  1. Planning a strategy that can reduce subsidy and maintaining cheap energy supply. Among others through transportation system transformation strategy from oil fuel basis (expensive-import) to gas basis transportation (domestic-cheap) complete with altering commercial gas with emphasizing giving incentive for constructing infrastructure in the last 10 years. Another strategy is by reallocating a part of oil fuel subsidy (import basis to biofuel provider aaaa9domestic basis).
Energy Conversion, Saving Energy and New and Renewable Energy Development
  1. Enhancing conversion of the use of oil fuel to gas and renewable energy in PLN’s electricity generation.
  1. 1. To arrange shrewd strategy for new and renewable energy. Long-term strategy by changing system buying price of renewable energy so that it agrees with its economic value/agrees with investment risk. Short term strategy, contribution reducing energy subsidy need to be entered into economic calculation through the use of geothermal energy and hydro energy, biofuel and biomass that is produced through formation of efficient, effective renewable energy management.
  2. Creating economical energy technology and giving disincentive to energy that does not meet minimum operational performance standard (MOPS) that is stipulated by the government.
Supplying National Electricity Needs/Electrification
  1. Developing geothermal powered power plants and hydro power plants with a capacity of 10 000 MW and national electrification reaching 100% ratio until 2019.
  2. Carrying out direct investment for increasing capacity, maintenance and rejuvenation of electric transmission and distribution infrastructures for increasing reliability of supply;
  3. Optimizing utilization of water resources and micro hydro power plants for meeting electricity needs of remote areas.
  1. Planning shrewd strategy for overcoming electricity shortage, reducing.
Raising Added Value and Down Streaming Natural Resources Industry
Developing processing industry for dominating added value for national economy by:

  1. Carrying out reformation in natural resources management and industry with purpose to increase added value of natural resources starting from mineral, coal, oil, gas, forestry until maritime for as much as possible people’s prosperity.
  2. Accelerating down stream industry processing mineral resources, especially nickel, copper and bauxite. State owned enterprises (BUMN) assigned to spearhead down streaming with support of monetary product and investment funding scheme.
  1. Processing mining products or down streaming should be carried out soon with purpose to reduce import and increase export of processed mining products.
  2. To that end giving fiscal and non-fiscal incentives to investors especially national investors for in country mining products processing industry.
Mining Contract Renegotiation
  1. Continuing renegotiation of general mining and oil and gas contracts that are not fair enough and prioritize terminated contracts for national business entities, combined with instrument that becomes authority of central government.
 Commit in renegotiation of mining source management based on equal profit sharing between the government and corporations either national or international should be planned as part of reinforcing capacity.
Investment, Trade and Industrial Development
  1. Increasing development and competing power of downstream industry of oil palm, gutta-percha, cacao, pulp and paper and other primary products, for increasing sectoral interconnection among agriculture, primary sector and industry.
  1. Increasing the number of national mining businessmen, number of people’s mining business should increase.
  2. Making regulation that obliges CSR and/or shares that are allocated for local people around mine sites, reinforcing national businessmen capacity (including people’s miners) in managing sustainable mines.
  3. Bring about energy sovereignty through policy reducing import oil energy by increasing oil & gas exploration and exploitation at home and abroad, increasing business efficiency of state owned enterprises (BUMN) energy provider in Indonesia (e.g. Pertamina, PLN, PGN); constructing gas pipes, developing renewable energy, prioritize the use of coal and gas for increasing domestic electricity production for serving the needs of households and industry.
  4. Bring about independent economy by activating strategic sectors, domestic economy among others by stopping conversion of productive land into other business such as industry, housing and mining.
Social Aspect: Conflict, Rights of People Around Mine Sites
  1. Boosting businesses of coal, nickel, copper, bauxite and iron ore become environmental and social friendly mining.
  1. Local community/around mine sites must get direct benefit from managing mine at their areas.
  2. Drastically reduce conflicts between local communities and mine businessmen.
Institutional Management
Have not explained explicitly yet.
  1. Strengthening coordination management of mining under Coordinating Minister, based on partiality, efficiency and effectivity.
  2. Arranging effective and efficient oil & gas management for developing strong oil & gas industry that is energy sovereignty oriented. For example, dissolution of BP Migas becoming SKK Migas is regarded as inviting uncertainty that culminated in declining investment and exploration activities or development so that improvement of oil & gas management is needed by way of in short term Government Regulation in lieu of Law is issued and in medium term revision to Red White Oil & Gas Law is carried out that characteristically developing national capacity and giving permanent legal certainty.

This article was featured in PETROMINER Magazine, No. 07/July 15, 2014 Edition.