Govt promotes use of coal, gas

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.