For Presidential Candidates' Issues on Energy, Talk is Cheap
Jakarta. Indonesian energy observers have expressed skepticism over the two presidential hopefuls' energy platforms, expecting that the strong nationalistic tone will remain mere campaign talk to sway voters.
"Both of them claim to be nationalists, but more for the sake of the presidential election," Pri Agung Rakhmanto, executive director of energy think tank ReforMiner Institute, told the Jakarta Globe on Thursday. "In reality, I don't think so. They will face the reality [that] it's impossible to be a fully nationalist country, because we still need foreign investors."
Pri cited Prabowo Subianto, whose nationalist campaign has been more aggressive than that of rival Joko Widodo, in saying that an extension of US-based mining giant Freeport-McMoran Copper & Gold's Contract of Work (CoW) is "very possible."
Similarly, Joko's Indonesian Democratic Party of Struggle (PDI-P) — will always be remembered for the privatization of telecommunication firm Indosat, then a state-owned company, during PDI-P chairwoman Megawati Sukarnoputri's presidency in 2002.
"There's no need to be too worried about both parties' nationalist claims." Pri said. "In the end, it will be the same; they'll be market-friendly."
It's more likely that whoever wins the election will continue the current government's policy, he added.
This will be especially true of Prabowo, whose running mate, former chief economic minister Hatta Rajasa, initiated oil and gas contract renegotiations during his term under President Susilo Bambang Yudhoyono, Pri said.
Each candidate offers an energy policy platform in their campaign manifestos, which are available on the General Elections Commission's (KPU) website.
Both candidates have advocated for more nationalist revisions of oil and gas laws, increased oil production, subsidy cuts and renewable energy development. Prabowo's platform, though, is seen as more concise and comprehensive than Joko's lengthy energy blueprint.
"Both offer sugarcoated platforms, but Prabowo's efforts are more sophisticated as he acknowledges all energy subsectors, touching on electricity, power plants, oil and gas, renewable energy and mineral resource. He also provides a detailed breakdown of his programs," Pri said.
"Jokowi's platform isn't as comprehensive. I must say he loses [to Prabowo] in terms of concept."
Pri said that Joko, though, has better plans for subsidy cuts, which the Jakarta governor plans to achieve through oil-to-gas and oil-to-biofuel conversion programs.
Meanwhile, Prabowo's vague plan of cutting subsidies for the wealthy through tax and excise is confusing, he added.
"However, we have yet to talk about implementations; what is written and what will actually be done are two different matters," Pri said.
Marwan Batubara, director of the Indonesian Resources Studies (Iress), also emphasized the need for action; not mere campaign promises.
Prabowo's vow to build more oil refineries and Joko's plan to apply enhanced oil recovery technology in order to boost Indonesia's oil production, for example, are nothing new, Marwan said.
"We need both [plans]. The existing refineries only supply 60 percent of the country's demand, [so] building new refineries is an urgent matter," he added. "But people spoke about this six or seven years ago. Don't just talk; what matters is action. And such is also the case with enhanced oil recovery. Because we haven't found new reserves, we need [the technology] to boost secondary production."
Marwan added that the current government's policy was already nationalist enough, citing the policy on contract renegotiations. He conceded, however, implementation remains poor.
"When contracts end, our state enterprises should take over. But that's not the case, such as with the Mahakam block, which should be just given to Pertamina," he said, referring to the oil-and-gas-rich block in East Kalimantan currently operated by France's Total, of which its contract is due to expire in 2017.
The Indonesian government has yet to make a decision on Total's future CoW.
"I see all the talk about nationalization as mere jargon to draw [votes]. If they want to improve the [market] condition, they should have revised the oil and gas law in 2006 or 2007," Marwan said.
Marwan praised the attention both candidates have placed on renewable energy, but was disappointed by the lack of specified targets which he said was crucial to bringing the hopefuls' agendas to a more concrete level.
"What we want is a blueprint, and then a road map for the implementation [of each candidate's program]. We want the plans to include the state institutions that will be involved, as well as the budget allotments for each of them," Marwan said.
He added it was necessary for whoever wins the July 9 presidential election to divert some of the country's burgeoning fuel subsidy — reaching Rp 210 trillion ($18.1 billion) this year — to help support growth in the renewable energy industry by subsidizing its output, and thus increasing renewable fuel prices.
"Without a subsidy divert, all [the candidates'] talk about renewable energy will remain empty promises, while increased use of renewable energy will help us reduce oil imports, create jobs and sour economic activities throughout the nation," Marwan said.
Energy is one of three topics that will be discussed during Indonesia's fifth and final televised presidential debate scheduled for Saturday evening. The debate — which will feature both sets of presidential and vice presidential candidates — will also touch on environment and food security.
Indonesians go to the polls on Wednesday to vote a new president to succeed Yudhoyono.
Posted by: "Sunny" <ambon@tele2.se>
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