Energy Development Update in Papua

Energy, no matter the sources is essential for everyone. One of the most important standard of living for a nation is the availability of energy, whether electrification or fuel supply. Indonesia is on its way to realize energy self-sufficiency. Under the President Joko Widodo administration, developments are being carried out all over Indonesia. These measures are of course will include remote areas in Indonesia with challenging access, including Papua. The transportation costs to Papua is very high, because of the distance, difficult access, and also poor infrastructures. Therefore, electrification and the provision of fuel oil has many difficulties. In order to solve this problem, the Government of Indonesia has carried out developments in aspects of infrastructure, facilities, and even policies. In a nutshell, the energy development update in Papua shows promising progress.

One National Price Fuel Oil

The “One National Fuel Oil Price” program was first brought up by President Jokowi during his presidential visit in Papua on 18 October 2016. President Jokowi received concerns from the Papuan people for the high oil price. During that meet and greet in Waisai, Papua, President Jokowi promised the people of Papua for the same oil price in accordance with the national price. This is what initiated the “One Oil Price” program. This program is the umbrella for Indonesia to achieve energy self sufficiency program.

With this program, the government will subsidize fuel oil revenue, which covers supplying, stocking, and distribution. Therefore, fuel oil price would be the same from Sabang to Merauke, from Miangas to rote Island, including Papua. With this policy, fuel oil would be sold at the same price all over Indonesia. Premium is sold at 6,450 IDR/liter and Solar is 5,150 IDR/liter, at distribution points in gas stations, distributors or agents of premium and solar fuel oil and APMS.

Hence, the Papuan people will have the same fuel oil price with others regions, which is 6,450 IDR/liter for premium and 5,150 IDR/liter for solar. Pertamina is now providing more Gas Station (SPBU) and Oil and Diesel Distributor Agents (APBS) in Papua, because they know that the rarity of the supplying agents are the cause of the high fuel oil price in Papua.

Although the fuel oil demands in Papua is not too big, only around 5% of the national demand, but Pertamina will prepare 900 billion IDR of budget to subsidize the Premium and Solar BBM in Papua.  Pertamina is using the cross-subsidization from the profit in other regions in Indonesia to subsidize the BBM transportation costs in far away and remote places in Indonesia.

Energy Development Update in Papua

Premium and Solar Oil Agent (APMS)

Papua already has its own Premium and Solar Oil Agent (APMS). The program from Pertamina prioritizes Papuan natives for APMS ownership. There are eight priority districts for APMS establishment, which are in the midland mountain areas of Papua that are hard to reach. These districts are Arfak Mountain district, Yalimo, Nduga, Mamberamo Raya, Center Mamberamo, Tolikara, and Puncak. These districts will have agents to distribute subsidized oil to remote and inland areas of Papua. These agents will be subsidized by the government, because of the high distribution cost.

To reach the remote areas of Papua, it will need 680 billion IDR. Hence, Highest Retail Price (HET) is being implemented in order for the price to not sky-rocketed once it arrived on the end customers. Pertamina has also made contract with several airlines to distribute oil to Pegunungan Tengah district of Papua. Currently, there are five airlines in this agreement.

The selling system for subsidized oil in all Pengunungan Tengah (Midland Mountain) districts of Papua will be carried out using coupons. This system is done to prevent shortage of oil and to make distribution easier. Especially in remotes places like Yalimo, where oil can only be transported by air. The maximum quota per day for a motorbike is five liters and for car is 20 liters.


Caribou Airplane to Suppress Fuel Oil Price

Compared to other areas in Papua, Puncak District is one of the most isolated areas. This fact is due to its hilly location which is hard to reach. Air transportation becomes the only way to transport staple food and other goods that the people of Puncak District need. The airplane they rented was very expensive, even for one trip. All of these factors have spiked the prices of goods in Puncak District.

To suppress the significant price gap, Head of Puncak District, Willem Wandik, bought the airplane for non commercial use. Hence it can be put to use in helping to lower the expenditures of Puncak District people.

Puncak District has owned an airplane. The steel bird was bought directly by the District Government from the United States. The airplane arrived in Ilaga Airport, Puncak District, Papua, Thursday (15/9/2016) around 10.00 AM of Eastern Indonesian Time.

The Caribou airplane has a haulage of 4 tonnes, with that much capacity this airplane can bring a lot of goods from outside of Puncak District, such as heavy machinery for infrastructure developments. Due to the non commercial use of this airplane, Puncak District Government does not need to spend a lot of transportation cost which previously reached hundreds and even billions of Indonesian Rupiah, to rent pioneer airplane, which only have the capacity of 1,3 tonnes.


Cheap Fuel Oil Reached Puncak Regency

Puncak Regency has always been a difficult place to send goods and necessities due to its challenging natural environment which is at the Papuan mountains. Hence, the prices sky rocketted, including fuel oil, which spike the prices of other goods. Fortunately, nowadays they only need to pay 6,500 IDR per liter for Premium fuel oil and 5,500 IDR for Solar oil. Prior to the construction of the gas station, Premium oil was sold at 50,000 IDR! Papuan fuel oil is no longer a luxury.


Oil and Gas Power Plant in Timika

The Indonesian State Electricity Company (PLN) is going to build a Power Plant Powered by Oil & Gas (PLTMG) in Timika, Papua, in early 2017. Currently in Timika, there are only diesel power plants powered and it is still inadequate for supplying electricity to every house in that region. PLN wants to change that situation by building PLTMG, where they can create more electricity for the needs of people in Timika.

This PLTMG will have 50 megawatts electricic power and will be built gradually by PLN. In early 2017, the PLTMG will supply 10 megawatts electricity to Timika, and it will be followed with another 40 megawatts.

Energy Development Update in Papua

Six Electricity Infrastructures for Papua

PLN is planing to build many electricity power plants that will be completed in 2020. Some of the power plants are Thermal Power Generation in Holtekam, Oil & Gas Power Plant (will be built next year), mobile power plant in Holtekam, and many other power plants, distributed in West Papua. According to the President Director of PLN, Sofyan Basir, PLN has already spent 7 trillion IDR for the project of building many electricity infrastructures in West Papua,

Six electricity infrastructures are also being built in Papua, which are Orya Genyem 2 x 10 MW Hydroelectric Power Plant, Mini Hydro Prafi Power Plant 2 x 1, 25 MW, Very High Voltage Air Lines (VHVPL) of 70 kilo Volt along Genyem-Waena-Jayapura, with the total circuit of 174,6 km, Holtekamp 70 kilo volts VHVPL in Jayapura with a total circuit of 43,4 km consisting of Waena–Sentani 20 Mega Volts Ampere Electrical Main Depot and Jayapura 20 Mega Volt Ampere Electrical Main Depot.

Presiden Jokowi wants the development to be accelerated. In his observation, it can already be completed in 2019, with approximately 240 Mega Watt of electricity increase and 90 percent of electrification. The President Director of PLN, Sofyan Basirhas also promised that all Sub Districts in West Papua will shine bright in 2020. He also agreed with President Jokowi that the development can be accelerated to be completed in 2019.


APMS in Tolikara

Currently, Pertamina has already built and inaugurate two APMS in Tolikara. This is expected to maintain the fuel stock and price in Tolikara. By establishing official distributors in many remote places in Papua, Pertamina to maintain the low price.

The retail fuel price in Tolikara Regency was usually around 25.000 Idr/liter, but now with Pertamina APMS, the people can buy Premium fuel for 6,450 IDR and Diesel fuel for 5,150 IDR. Tolikara will get 70,000 liter of fuel quota per month. This quota will be divided to the two APMS. Hence, each APMS will get 35,000 liter of fuel per month.

Energy Development Update in Papua

National Fuel Oil Price in Papua is Realized

Since 25 October 2016, Fuel oil price in Papua is the same with other regions in Indonesia. President Jokowi has envisioned that the price of fuel oil should be uniform nation wide. Therefore, the economy in Papua will start to improve, electricity (supply) will increase, and fuel oil price decreases.


Air Tractor to Reduce Fuel Oil Price in Papua

As part of the “One National Fuel Oil Price” program, in December of 2016, two more air tractors for Papua will be added to distribute fuel oil to places with no land or water access. The total of five air tractors will serve Papua, North Kalimantan and Maluku.

The air tractors are rented and operated by Pelita Air Service which is a subsidiary company of Pertamina (National Oil Company of Indonesia). These air tractors are included in the 800 billion IDR/year subsidy for Papua and West Papua. The funds allocation has already been prepared for 5 consecutive years, hence, the all round budget should be 4 trillion IDR.

Energy Development Update in Papua

Big Investments for Fuel Oil in Papua

The realization of “One National Fuel Oil Price” in Indonesia is a huge project for our nation. Many parties need to be involved and big investments need to be allocated. With 800 billion IDR/year subsidy for Papua and West Papua, a lot of resources are being allocated for “One National Fuel Oil Price” in Indonesia. The funds allocation has already been prepared for 5 consecutive years, hence, the all round budget should be 4 trillion IDR.

According to President regulation Number 191 of 2014, the project is assigned not only to Pertamina. However, the implementation would be the responsible of other state-owned companies in Indonesia. Initially, many parties are skeptical about this program. Some even gave warning regarding the profit loss that could be experienced by Pertamina, as one of the primary agency responsible for the realization of “One National Fuel Oil Price”. However, President Jokowi has emphasized that this program is not about profit, but for the greater good of the people of Indonesia. Hence, this program is necessary to be executed.

In this program, Pertamina implements cross-subsidy for the distribution of fuel oil in several areas with challenging access, including Papua. The distribution costs would be gradually calculated and more distributors would be added.


Fifty Four Gas Power Plants for Electricity in Papua

PLN in Papua will build 54 Gas Power Plants in order to help the electricity provisioning in Papua. Private companies are also planned to build their own power plant to support the supply of electricity in Papua. They can build their own electricity network and are authorized to sell to people who live in remote places.

The government has already conducted feasibility study for building that infrastructures. This program is a part of the realization of 35 hundred MW mega projects in Papua. Gas power plant is important for the 35.000 MW project, because it can supply 13.400 MW or 38% of that project

PLN in Papua will cooperate with the Regional Manager of Kellog Brown and Root (KBR) Indonesia Keith Garry to work on the feasibility study regarding patterns of gas provisioning in Papua. PLN in Papua will get the optimum and integrated design of the logistic pattern and design engineering for the utilization of Liquefied Natural Gas (LNG), especially for East Indonesia. The use of LNG will increase around 300% in 2025

Energy Development Update in Papua

The New Chapter of One National Fuel Oil Price in Papua

The Minister of energy and Mineral Resources (ESDM), Ignasius Jonan has officially signed the ESDM Miniter Regulation regarding the One National Fuel Oil Price, which includes Papua. The next step would be the follow up from the Minister of Law and Human Rights (Kemenkum HAM).

If the process in Kemenkum HAM has finished, then the new Minister Regulation will be socialized to private companies regarding the development of gas stations and selling fuel oil in remote areas such as the mountain areas in Papua.

Hence, the regulation will not apply only to Pertamina. It will also apply to private fuel oil companies such as Total, Shell, AKR, Petronas, and so on. They would also be obligated to open gas stations in remotes areas, and not in big cities only. The uniform fuel oil price should be realized on 1 January of 2017.

This regulation would also provide profit for private companies. They will be given the benefit of gaining high margin for the fuel oil distribution to challenging areas that are hard to reach. Therefore, developing fuel oil distribution in remotes areas such as in Papua would be beneficial and would attract investors.


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