Stimulus for power generation industry

10 months ago . 1 min read
EC
Ester Christine Natalia
Senior Writer at Forbes Indonesia
Stimulus for power generation industry

By Elisa Valenta

To lower the energy costs, Indonesia's government has added the power generation industry to a list of industries eligible for cheap gas. Through Energy and Mineral Resources Ministry Regulation No. 10/2020, the government caps the price of natural gas sold to power plants at a maximum of $6 per million British thermal units (mmBtu), lower than the average price $8.4 per mmBtu this year.

PLN's Strategic Procurement Director II, Djoko Abumanan, explains the regulations on cheap gas prices specifically for power plants, can increase company efficiency and savings. PLN's total fuel cost for this year is estimated to reach Rp146.67 trillion ($10.28 billion).

"By capping gas prices for PLN likely will reduce the utility's costs significantly, as 38% of the company's fuel expenditures are for natural gas," Djoko tells Forbes Indonesia.

The government had previously budgeted Rp54.8 trillion in subsidies for PLN in 2020, assuming the utility will begin charging some customers market prices in January. The energy ministry, however, has recently decided not to raise electricity tariffs until June 2020, extending its policy of freezing rates since 2017.

EC
Written By
Ester Christine Natalia
Senior Writer at Forbes Indonesia
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