Indonesian presidential candidates consider ending state power monopoly

JAKARTA, Indonesia: Leading candidates in Indonesia’s upcoming presidential election are considering ending the national electricity company’s monopoly to speed up the transition to cleaner energy, their campaign teams told Reuters.

The three candidates in the February 14 elections have expressed their commitment to cleaning up the electricity sector in order to reduce greenhouse gas emissions.

Defense Minister Prabowo Subianto and former provincial governor Ganjar Pranowo, very close in recent polls, are studying the possibility of ending the monopoly of the state company Perusahaan Listrik Negara (PLN). This decision would allow renewable energy producers to sell their electricity directly to consumers.

However, this endeavor is not without its challenges. Indonesia currently lacks the necessary regulations to determine the fees that independent power producers must pay to PLN and the scope of services that PLN can provide to them. Additionally, the country’s vast archipelago results in unconnected grids between its main islands, complicating nationwide electricity distribution.

Former Jakarta Governor Anies Baswedan, lagging in opinion polls, called for better leadership in the electricity sector but stopped short of proposing dismantling the PLN monopoly.

Past discussions about opening the sector to competition have been met with opposition, as some fear that rates set by the government will be subject to market fluctuations. Supporters argue that opening up the sector would accelerate the adoption of renewable energy, as independent power producers would be incentivized to offer green energy to companies committed to carbon neutrality.

Currently, PLN is the main electricity supplier for most customers in Indonesia. It manages power plants and buys electricity from independent producers, more than half of which comes from coal and 12% from renewable energy.

Ganjar, the ruling PDIP party candidate, suggests focusing the PLN on expanding electricity infrastructure and connecting the islands. This would allow renewable energy producers to inject electricity into the grid and supply customers. Meanwhile, experts working on Defense Minister Prabowo’s energy policy discussed the transfer of power, but with the government maintaining control over tariffs.

Agam Subarkah, CEO of climate consultancy Cendekia Ikim Indonesia, said delaying businesses’ access to renewable energy could lead to lost investment.

“If these companies fail to obtain renewable energy by 2025 or 2030, they may view Indonesia as a country where they cannot expand their business due to the difficulty of obtaining renewable energy,” did he declare.