Category: Energy

Indonesia aims to emulate Norway in managing its mineral wealth

After three years leading Indonesia’s largest state-owned bank by assets, former Bank Mandiri chief executive officer Budi Gunadi Sadikin has a new role as special staff to Rini Soewandi, the Minister of State-Owned Enterprises (SOE).

In this role, which he started in late June 2016, Budi is charged with establishing a holding company made out of state-owned mining enterprises to re-do the way the government handles its future stakes in the industry.

Continue reading “Indonesia aims to emulate Norway in managing its mineral wealth”

New Pertamina chief faces one-price fuel policy challenge in a vast archipelago

The newly appointed president director of state-owned energy firm Pertamina, Elia Massa Manik, has a huge task ahead to carry out President Joko Widodo’s one-price fuel policy, in the face of inadequate infrastructure to distribute fuel to the country’s remote areas and far-flung islands in the Indonesian archipelago.

Maryati Abdullah, the national coordinator for PWYP Indonesia, a civil society coalition for energy and extractive industry governance reform, considers the policy is viable if Pertamina could import crude oil at a much more affordable price and refine it in its own refineries.

“They could start by revitalizing its existing, old refineries so they could increase its production output, while also remain committed to developing new ones,” she said.

Unit pengolahan cilacap

Pertamina refinery in Cilacap, Central Java. Photo: Pertamina.com

Widodo announced the policy in October 2016 during a visit to Yahukimo, a district near the Indonesia-Papua New Guinea border in the easternmost province of Papua. Due to the location and lack of infrastructure in Papua and the eastern part of Indonesian archipelago, fuel prices can cost up to a dozen time more from the normal price of 6,450 rupiah per liter for petrol and 5,150 rupiah per liter for solar. The policy is expected to cost Pertamina about 800 billion rupiah annually.

Fahmy Radhi, an economic energy analyst from Universitas Gadjah Mada in Yogyakarta agrees that having its own production infrastructure could give Pertamina wider fuel distribution coverage.

“If it has its own refineries, Pertamina won’t have to import up to 650,000 barrel per day. This is a huge amount that the oil and gas rent seekers have been cavorting around,” Fahmy said.

Kurtubi, a lawmaker from the House of Representatives Commission VII which oversees energy and mineral resources said as a company drawn to constitutional obligation about exploitation of the country’s natural resources should benefit the people, there is more that Pertamina has to consider in its operation than merely making a profit.

Article 33 in Indonesia’s 1945 Constitution states that “sectors of production which are important for the country and affect the life of the people shall be controlled by the state and the land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest prosperity of the people.”

“One-price fuel policy is a constitutional mandate. Pertamina could do it as long as the cost is efficient,” Kurtubi, who goes by one name, said.

“The new president director has to be able to operate the company without contradicting the constitution,” he added.

Kurtubi also said that cutting fuel import should be high in Pertamina’s agenda under Manik’s leadership.

“It should develop its own refineries so that Pertamina could produce its own fuel to meet the domestic demands,” Kurtubi said, adding that the existence of a refinery in a certain area could also create multiplier effects that would boost the local economy and open new jobs.

Manik was appointed to head the company during Pertamina’s general shareholders meeting at the State-Owned Enterprises Ministry in Jakarta on March 16, more than a month after then-chief executive Dwi Soetjipto and deputy director Ahmad Bambang were ousted on Feb 3 because of what the government – its majority shareholder – was a leadership problem and a lack of teamwork.

Manik, who was the president director of PT Perkebunan Nusantara (PTPN) III, the holding company of 14 state plantations firms since April 2016, is an alumnus of Bandung Institute of Technology and Asean Institute Of Management.

In his first address to Pertamina’s employees, Manik said he would focus on strengthening the company’s human resources and maintaining Pertamina’s improved performance for the past years.

Sudirman Said, the then-energy and mineral resources minister, said in 2015 that Pertamina was able to save 250 billion rupiah per day after ousted CEO Dwi in 2015 disbanded Pertamina Energy Trading Limited (Petral), a Singapore-based Pertamina subsidiary handled crude and fuel oil imports for the state energy company and was notorious for being the oil and gas rent seekers’ den.

“There are many important projects we need to execute to achieve the national energy security goal, therefore it is important to gain trust so that we can adeptly carry out the projects,” Manik said.

PWYP Indonesia had urged the government to select the new president director in a transparent, credible and independent manner, following the Feb 3 ouster of Dwi.

Maryati said the government didn’t say much about the reason they appointed Manik, but given his public track record on improving corporate efficiency, she holds a favorable view that Manik would be efficient in his human resources planning and be able to restructure various executive positions to a more effective appointments.

“We also hope he would not be swayed by certain political interests,” Maryati said.

 

Electrifying Asean with interconnected energy grid

Vientiane – Four Asean member states are working on a power grid interconnection project between Laos, Thailand, Malaysia and Singapore as part of regional efforts to ensure energy security.

Laos deputy minister of energy and mines, Viraponh Viravong said working groups on the first 100 Mw that uses existing facilities are meeting regularly to make this interconnection a reality.

A 2013 report from Jakarta-based Economic Research Institute on Asean and East Asia (ERIA) showed that the estimated possible cumulative benefit range from this project would be approximately US$ 20 billion.

“A memorandum of understanding amongst the four countries is planned to be signed in September in Myanmar during the Asean Energy Ministers meeting,” said Viraponh during a discussion on Asean energy challenge at the 5th ERIA Editors’ Roundtable held earlier this month in Vientiane, jointly organized by ERIA, Lao Journalists’ Association and Vientiane Times.

The deputy minister said Laos produces almost 100% its domestic electricity supply from hydropower. In 2015, its household electrification was 89% and would rise to 95% by 2020.

“Combining electricty production from large hydropower projects for domestic use and export and interconnection with neighboring countries has proven to be cost-effective for Laos,” he said, adding that the country also projects to export up tp 10,000 megawatt to Thailand, Vietnam, Cambodia and Myanmar by 2020 or about 50,000 GWh annually, which would also contribute to energy security in the region.

“Energy security tops the energy policy [in Laos], aimed at improving energy diversification, energy conservation programs and intensifying efforts to identify and develop energy resources,” Viraponh added.

However, another challenge is ensuring affordable supplies to support continued economic growth and development in the country, which aims to gain eligibility to graduate from least developing countries status by 2020 and to achieve the ranking as an upper-middle-income country by 2030.

Landlocked Laos has a population of 6.49 million people and from 2011 to 2015, its gross domestic product has grown on average of 7.4% while its electricity demand has increased by more than 14%, thus making energy security fundamental for its national development because energy supports and sustains economic and industrial activities.

ERIA president Professor Hidetoshi Nishimura said ERIA has completed a long-term development vision for Laos industrial development strategies 2016 – 2030.

“In cooperation with Lao PDR government and research institute, Lao PDR will shift from landlocked country to land-linked country,” Professor Nishimura said.

With all Asean member states, except for Brunei, being net importers of energy, the regional bloc faced a serious challenge in energy security, which is essential to boost its integrated economy and regional development.

The bloc’s current primary demand for energy is about 550 Mtoe or million ton of oil equivalent, which supplies its 600 million population across the 10 member states and generates 1,166 Mt of energy-related Co2 emmission. According to various data from Asian Development Bank, International Energy Agency and ERIA, the primary energy demand in the region by 2035 would increase to 1,004 Mtoe, generate 2,300 C02 emmission used by 736 million population.

The Asean 2016 chair Laos also noted that common energy challenge in the region include improving energy security and sustainability of energy use as well as reducing economic costs, though energy policies in the ten member states vary as they reflect the differences in political direction, economic development and natural resources assets.

Energy is rated as the number one out of the top 10 problems that Asia would face over the next 50 years, followed by water, food, environment and poverty, said Venkatachalam Anbumozhi, a senior energy economist at ERIA.

He noted that the success of development in the region would also rely on the rate of electricity consumption.

“Human development index and energy consumption are linked. Countries with high human development index have higher energy consumption compared to those who don’t,” Anbumozhi said, adding that Singapore and Brunei, whose energy consumption are almost 8,000 kWh per capita, were the two Asean countries that belong in the same group of countries that have high energy consumption and human development index, such as Japan, Australia and the United States.

“Energy security concerns grow in Asean under growing demand circumstances,” he said.

The concerns grow as Asean’s energy supplies from Middle Eastern countries are experiencing setbacks and with the changing dynamics of emerging Asia as China, Japan, Korea slow down while India, Asean and Central Asia take over as the engines of global energy demand growth.

To ensure its energy supplies, Asean energy development would be propelled by geopolitical and market uncertainties, while energy efficiency and renewable energy could play a role in the region’s energy security and setting the low-carbon green growth agenda.

Anbumozhi said the region needed to look to an energy transition in the future when its pyramid of energy use, which currently places fossil fuel for the most part at the base and less use of renewable and energy efficiency at the apex, would be reversed to a much-wider use of renewable and energy efficiency and eventually, an end to the use of fossil fuel.

“Far-sighted government policies, innovative financing and regional cooperation are essential to steer the Asean’s development on to a safer course,” Anbumozhi said.

Asean’s continued development and integration however is somewhat overshadowed by the aftermath of Britain’s exit from the European Union (EU), raising concerns whether the same thing could happen in Asean.

But economics and international affairs pundits dismissed the notion, saying that Asean has a different model of regional integration compared to the EU. Most notably, EU member states have to relinquish some sovereignty such as writing their own laws, which would be written in Brussels and accommodate regional concerns.

Dr. Victor Sumsky, the director of Asean Centre at the Russian Foreign Ministry’s Moscow State Institute of International Relations said that EU was overly bureaucratized. It provides many lessons for Asean of what not do in terms of bureaucratization and institutionalization.

“It is not foreseeable right now of a Brexit replica in Asean,” he added.

ERIA senior economist Dr. Ponciano Intal said compared to the EU, Asean is in a different stage of development and the region would have a greater potential by integrating.

Asean secretary-general Le Luong Minh said the impact might be on the negotiations for free trade agreement between the two blocs, which started in 2007 but was halted in 2009 to make way for EU to forge trade agreements bilaterally with individual Asean member states first.

Moreover, Asean doesn’t have the migration issue and free movement of people that EU face. Non-Asean citizens are not that free to travel within the region because Asean doesn’t have a single visa policy like the EU’s Schengen visa.

“For us, it is a wake up call. We have to promote efforts to narrow development gap and for member states to strike the balance between short-term national interests with long-term regional interests,” the secretary-general said.

Immigration authorities checking reports energy minister is a US citizen

Indonesian immigration authorities are investigating allegations that newly appointed Energy and Mineral Resources Minister Arcandra Tahar is a US citizen.  Continue reading “Immigration authorities checking reports energy minister is a US citizen”

Coal downturn leaves behind deaths, environmental ruin

For nearly two years Rahmawati has been seeking justice for her 10-year-old son, Muhammad Raihan, who drowned in a water-filled coal mine pit in Indonesia’s East Kalimantan province. Continue reading “Coal downturn leaves behind deaths, environmental ruin”

Zero waste, clean environments with domestic biogas

Sanur, Bali- Wearing a pair of knee-high boots, Ni Wayan Karini strode past an expanse of colorful fields of flowers taller than an average adult. She later stirred remaining of chicken boiled in two large pots for feeding pigs in her backyard farm in Sanur area of Bali province.

“We usually have at least 50 pigs in our pigsty, but because we just sold some, the sty is a bit empty,” she said.

“Once every three days I get garbage from neighbors. They don’t know what to do with their garbage. Today I got this chicken, sometimes I get cookies, rice, fish, many things,” said the 50-year-old woman who manages the farm only with her husband.

“We sometimes get thrown sushi. Our pigs eat sushi, although we rarely eat sushi,” she said laughing heartily.

Once in a while Karini wiped the sweat from her pretty face. With her husband, Nyoman Brandi, she cleans the pigsty and keeps the fruit and flower gardens. The entire backyard and pigsty were very clean, and did not stink at all, unlike some other pig farms.

They achieved this after they built a 6-cubic-meter domestic biogas (BIRU) digester in 2010, which functions to transform animal and human waste and other organic materials into biogas that is useful for domestic scale of cooking gas consumption and energy for lighting.

BIRU digester technology is a fixed-dome adapted from a system used in other countries like Bangladesh, Cambodia, Laos, Pakistan, Nepal and Vietnam.

The fixed-dome digester is made of bricks and concrete buried under the ground. The system has been proven to be safe for the environment and function as a source of clean energy.

Initiated in May 2009 with the support from the Netherlands Embassy, Indonesia Domestic Biogas Programme (IDBP) or BIRU has built more than 15,000 biogas digesters in 10 provinces in Indonesia by June 2015 to promote modern and sustainable renewable energy for the Indonesian society.

Nyoman Brandi, a retired civil servant from the environmental office, had been familiar with biogas concept because in Bali there were many pig farms.

“Pig farms are the enemy of Bali’s environment, that’s why I wanted to change that image,” he said.

“Before, we got complaints from neighbors because the pigsty and the pig dung stank, but after we planted the biogas digester, the problem was solved,” he said.

The neighbors who previously protested the farm now used Karini and Brandi as their “garbage dump.” Now, when the couple opened their gate in the morning, they would find garbage from the neighbors.

“They know we can use the garbage. They know that their garbage is useful for our pig farm,” Nyoman said.

The biogas residue or the bio-slurry from the digester is also useful for the neighborhood. The couple uses the bio-slurry as organic fertilizer for their flower and fruit plants in their fields.

They got double advantage because their plants grow healthily.

In line with the Hindu tradition the couple follows, they use the fruits and flowers from their own gardens for daily offerings. Because they had good yields, they could even sell some flowers to their neighbors.

“The fresh flowers fetch Rp 3,000 per stalk,” Karini said.

Good sanitation had also become the major motivator for Joko Winarno, an owner of a tofu factory “Sri Rejeki” in Sidoarjo district, Sragen in Central Java, to use biogas.

The home industry he managed with his wife employed 10 people and used 200 kilograms of soy beans per day to produce tofu that would distribute to nearby markets.

tofu industry
Joko Winarno, owner of the tofu factory “Sri Rejeki” in Sidoarjo district, Sragen in Central Java, take advantage of domestic biogas to boost his business as well as reducing pollution in his neighborhood, Photo: Sonang Elyas/BIRU

“Before we had biogas, we threw liquid waste from our tofu industry into the river. It stank a lot, and we felt bad to the environment,” Joko said.

His concern for the stinking liquid waste prompted Joko to learn how to manage his waste. In 2014 he met a construction worker who introduced him to the domestic biogas, which could help him manage the waste.

Joko Winarno finally found the solution to his problem. He then built a big digester at once, measured 12 cubic meter, because he realized that the liquid waste resulted from his tofu industry was a lot, so he uses the waste as ingredient for the domestic biogas, otherwise this liquid waste would pollutes the environment.

As expected, the result had satisfied the 47-year-old businessman very much.

“It has been a year since the last time I bought LPG for cooking in the house and for frying tofu. Most importantly, the liquid waste no longer disturbs the environment,” he said, with a clear sign of relief on his face.

“I have calculated that I can save Rp 200,000 to Rp 300,000 per month by replacing LPG with biogas,” Joko said.

The waste problem in farms or industry is basically the same: they emit bad smell to the house and the neighborhood. After installing biogas digester, the waste problem is not only solved but it also gives benefits to the users.

 

 

Families go against all odds to make lives better

Sumba, East Nusa Tenggara (NTT)-  Bernadus Missa is not a person who gives up easily.  Continue reading “Families go against all odds to make lives better”