RI needs over $505b for energy development

JAKARTA (JP): Indonesia's energy sector needs at least US$505 billion in new investment during the current 25-year development program, which ends in 2019, to meet increasing demand for energy, an official said.

Secretary-General of the Ministry of Mines and Energy Umar Said told a seminar organized by French alumni yesterday that approximately $480 billion is required in the electricity sector alone.

He said Indonesia needs at least $240 billion to build power plants with a total generation capacity of 160 gigawatts and a further $240 billion to construct electricity transmission and distribution networks before 2019.

"That national electricity system will create a really competitive market. The private sector and state-owned electricity firm PT PLN will compete, in real terms, in that market," Umar said.

He said the government will no longer be able to provide sufficient funds for electricity investment, but will act as a market regulator to ensure a level playing field.

As most future electricity plants will be coal powered, Indonesia must build new infrastructure to transport approximately 170 million tons of coal per annum from coal mines to power plants. Such facilities include railway lines, locomotives, train cars, conveyors and ports.

Although Indonesia's energy consumption is slowly shifting from oil to gas and coal, the oil industry will remain important because many existing industries and consumers still rely on oil- generated energy.

Oil currently fulfills 65 percent of Indonesia's energy needs. A further 21 percent is provided by gas, 7.5 percent by coal and 4.7 percent by other sources. By 2019, only 15 percent of the total energy consumed in Indonesia will come from oil.

The per capita consumption of energy is predicted to increase from the current level of 2.6 barrels of oil equivalent to 12.3 barrels in that time.

Umar projected that during that period the output of Indonesia's crude oil will decrease from the current 558 million barrels per annum to 495 million barrels.

To meet continuing demand for oil-generated energy, Indonesia needs $15 billion to build at least five oil refineries, each with a processing capacity of 125 barrels of crude oil per day.

A further $10 billion is required for oil-related infrastructures such as ports, tankers and oil depots as well as distribution pipelines, networks and outlets.

"Some of that investment cost can be avoided by using a free trade system, that is importing some of our energy needs from foreign sources. However, we still need to build related infrastructures here, such as distribution networks," Umar said.

He said Indonesia's current challenge is to diversify its energy sources to meet increasing demand for energy, which is anticipated to reach 3.2 billion barrels of crude oil by the year 2019.

Indonesia must also equip itself with advanced energy technology, eliminate energy subsidies, create a competitive energy market and diversify the ownership of energy projects, he said. (rid)