Govt promotes use of coal, gas

Urip Hudiono, The Jakarta Post/Jakarta

To better manage the country's energy resources and prevent future energy crises, the government is laying out a new energy strategy that prioritizes the use of coal and natural gas for domestic consumption.

Coordinating Minister for the Economy Aburizal Bakrie said on Wednesday industries were expected to take the lead in implementing the policy, and the government would encourage them to use coal and natural gas to generate electricity for their production activities.

"The main point of the new energy strategy is that we will from now on use the cheap and abundant energy resources that we have for our own consumption, while reserving the more expensive and limited ones for export," Aburizal said in a discussion forum with the Indonesian Chamber of Commerce and Industry.

These cheap and abundant fuels, Aburizal said, included coal and natural gas, while the more expensive and limited fuel would be the country's declining crude oil resources.

Aburizal did not say when the plan would officially be introduced and implemented.

"With this strategy, we can use Aceh's rich natural gas reserves for our fertilizer industry, for example, rather than exporting it cheaply to other countries," he said, adding that this switch in fuel consumption would help reduce the government's fiscal burden from the fuel subsidy.

The government continues to subsidize most fuels sold in the country, including diesel and kerosene, which has eaten into the state budget and led to fuel smuggling.

Aburizal said the new energy strategy could improve the competitiveness of the country's industries by reducing their production costs.

"Our survey shows that industries will be able to reduce costs by 30 percent as compared to using subsidized fuel, and by up to 100 percent if using nonsubsidized fuel," he said.

"Industries can also benefit if they can produce their own electricity using coal and natural gas-fired generators for 4.5 U.S. cents a kWh, as compared to PLN's 7 cents."

The government is also looking into other energy resources, including hydropower and geothermal.

Aburizal said the government was also expecting households in the country to embrace the planned new strategy through the use of coal briquettes.

However, he said the scheme could only work if the price of kerosene was at least Rp 1,500 (some 15 US cents) a liter.

Kerosene is currently priced at Rp 700 a liter.