Govt will set up national energy management agency

In light of the current fuel problems, primarily due to soaring globla oil prices and higher-than-expected fuel consumption, there has been talk about the need for the country to boost the use of alternative energy. Failing to ride this momentum to seek and intensify attempts to reduce the country's dependence on oil puts the whole economy at stake. Against this backdrop, State Minister of Research and Technology Kusmayanto Kadiman talked with a small number of journalists, including The Jakarta Post's Tubagus Arie Rukmantara, last week. The following is an excerpt of the interview.

Question: How do you perceive the recent energy crisis in the country? Answer: There were three major factors contributing to the recent situation -- one, is the increasing crude oil prices; two, is the shifting of the country from a net oil exporter to a net oil importer; and three, the government's policy, issued last March on reducing the fuel subsidy expenditures for only some kinds of fuels, have changed people's fuel consumption behaviors.

For example, some people have blended kerosene or diesel fuel with lubrication oil to produce marine fuel oil and to power diesel engines. Those type of fuels they use are the ones that are still highly subsidized by the government.

This has forced us to increase the subsidy budget from Rp 90 trillion (about US$9.2 billion) to Rp 138 trillion ($14 billion).

Meanwhile, at present, our energy consumption is dominated by oil, which reaches between 50 to 60 percent. We have not utilized other energy sources, such as coal and geothermal power, which we have in abundance.

As a person who is in charge of research and technology, what do you propose to solve the problem?

If we don't change our present fuel consumption patterns, in 20 years, it will eventually lead to the same problems over and over again.

Let's change our fuel consumption pattern to a "balanced energy mix", which means that of our total energy consumption, only 30 percent should come from oil, another 30 percent from natural gas and coal and the rest from various other power sources, such as bio-mass, geothermal, wind, solar and lastly, nuclear plants. I remind you that nuclear power has to be the last solution, but we have to do studies on its development anyway.

Another solution is to turn to "green fuel", the kinds of fuel which are environmentally friendly, which has raw materials spread throughout the country.

We are the largest crude palm oil producer in the world, and it can be processed and used as bio-diesel. We have a lot of cassava for producing bio-ethanol. And we have a lot of castor oil ( jatropha curcs) plants, which could be a potential resource for biofuel.

Among the alternative fuels you have mentioned, which is the most feasible to be applied in Indonesia sometime soon?

We actually could maximize all of them. My ministry and eight other ministries are working under the National Energy Coordination Agency (Bakoren), have concluded the final draft of the National Energy Management (PEN), which will soon be legalized either under a government regulation or a presidential decree.

PEN stipulates the road map of utilizing various alternative energy resources from 2005 to 2025. Can you elaborate on what you have formulated so far in PEN?

In 2025, the "balanced energy mix", would be realized by first, maximizing available resources like gas and coal.

And in 2017, we are expecting that the first nuclear plant will start operating. At the same time, the utilization of other energy resources such as wind, solar, geothermal and others will also be maximized. How do you convince the people that PEN is not just another blueprint that will not be achieved?

First, these measures are feasible. Why? Because we have actually started to carry out some of them.

For example, the State Electricity Company (PLN) has started to open a tender for geothermal plants in Bedugul, Bali. We already have one in Kamojang, West Java, in North Sumatra and one in South Sumatra. This is one of the ways to provide power to electricity generating stations from sources other than oil-based fuels.

To maximize wind power, my ministry has built eight wind mills, which can produce between 300 watts and 10 kilowatts, in Yogyakarta. My dream is to build 1,000 wind mills along the South Coast of Java, which, in turn, will give a chance for poor people there to start enjoying electricity.

We have also produced gasohol or bioethanol in Lampung, Sumatra and have promoted the development of refineries for castor oil.

However, there are three key players needed to make PEN successful, which I call ABG (a local slang reference sometimes used to describe teenagers). These three are Academicians, Businessmen and the Government. Can you define each role of those three key players?

First, academicians. We will encourage them to do various research to develop the use of alternative fuel, such as its standardization and quality. While social scientists are needed to measure the economic, social and cultural impacts on changing people's behaviors.

Businessmen will be invited to invest, produce, or sell the fuel. They will also be given incentives, such as subsidizing the production cost of alternative fuel technology.

We also hope to approach regional administrations to apply alternative fuel for their mass transportation systems. I have talked to Jakarta Governor Sutiyoso for instance and tried to encourage him to use natural gas-powered shuttle buses for the next busway corridors they are planning. But the problem with your plans is the need for money, for example we need billions of dollars in investment to develop an oil palm plantation planned to be built spanning across the border of Indonesia and Malaysia in Kalimantan, where will you get the funding?

By providing assurances. Investors need to be certain that if they cooperate with us that they would gain long-term and sustained benefits. When that is assured, investors will come.

For instance, China is willing to invest in the oil palm plantation plan. Hopefully the MoU will be signed by the president when he visits China on July 27.