Indonesia’s Electricity

Infrastructure Development
Challenges and Opportunities

Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

May 2017
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

2
Indonesia needs to develop its Infrastructure

Indonesia has lots of catching up to do, to reach middle income status by 2025

Country 2014-2015 2015-2016

Singapore 2 2
China 46 39
India 87 81
Indonesia 56 62
Malaysia 25 24
Philippines 91 90
Viet Nam 81 76
Thailand 48 44
Source: The Global Competitiveness Report

Indonesia could become one of the largest economic countries in the world. One
of the key necessary pillar is to develop its infrastructure. To improve its global
rank on infrastructure, significant number of initiatives and efforts needs to be
implemented to accelerate Indonesian infrastructure development
3
Indonesian Infrastructure Projects : Between Hope and Reality

Infrastructure Summit 2005

2005 91 Infrastructure Projects were

launched worth about US$ 22,5
Billion offered to investors.

Private Partneship Projects

(PPP) Book was launched
2010 87 Infrastructure Projects were
launched worth about US$ 34
Billion to investors

10 years performance
Only 3(three) PPP
2015 Infrastructure Projects
reached construction stage : 10 years
Toll road Cikampek to Success
Palimanan, Clean Water rate only 3%
Project in Tangerang dan
Power Plant project in
Central Java (Batang)

4
However there are big disconnects betwen Indonesia’s Plan and
its Implementation

3,000 ft High level

Political Decision,
Groundbreaking

Overlapping Regulations
BIG
Budget/Funding mechanism
Location Permits DISCONNECT
Procurement Process
Government Supports and
Human Resources Guarantees
Spatial Planning Need intensive
debottlenecks for
Forestry Permits process
comprehensive problems
Environmental assessment solving, periodic Monitoring
process
and Evaluation, and clear
Coordination and commitment
Action Plan

3 ft On the ground realities Implementation

5
Bottlenecks of Indonesian Infrastructure Projects

69% Problem due to Spatial Planning,

Land Acquisition and Forestry Permit
Funding &
Financing Others
14% 11%

Spatial Forestry
Planning Permit
22% Permits and 14%
License 20%

Land
Acquisition Environmental
33% Impact Analysis
6%

• Unclear regulation or no regulation

• Limited capability in Asset management
• Lack of expertise in Project Delivery and Project Pipelining
• Government de-bottlenecking command and control
• Lack of Focus
Another challenge to Indonesia – limited state budget

USD 282 Billion USD 480 Billion

>7% to GDP annually

USD 198
Billion
Base
line

Available Funding gap Funding needed for

Government funding infrastructure
Source: Background study RPJMN 2015-2019 Bappenas
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

8
 Indonesia Infrastructure Development Targets in 5(five) years
from 2015 to 2019
Logistic Related
Banda Aceh
Sea toll concept as a means to
Miangas
Belawan support Indonesia in becoming the
Kuala Tanjung
world maritime axis.
Pontianak
Maratua • develop 24 new seaports
Dumai Bitung
• increase number of substantial
Batam Singkawang Pohuwato
Maloy
vessels (pioneer cargo, transport
Halmahera
Padang Muara vessels, pioneer crossing
Jayapura
Pangkal Teweh Tojo Una- Sorong vessels)
Pinang Una Taria
Enggano • develop 60 crossing ports
Palangkaraya Banjarmasin Sultan
Ambon
Hassanuddin Namniwel Kenyam
Aboy
Strengthen connectivity through air
Panjang Makassar
Tj. Priok transport infrastructure
Tj. Perak development
Kertajati
Merauke Koroway • develop 15 new airports
Cilacap Moa Batu
• develop air cargo facilities in 6
Lombok
Location of 24 new seaports & locations
Kupang 15 new airports
Source: Bappenas • increase number of pioneer
airplanes

Improve transport efficiency by road Reduce logistic cost by improving railway Develop urban transport
development and maintenance infrastructure • develop Bus Rapid Transit
• develop 2,650 km of new roads develop new tracks in Java, Sumatra, (BRT) in 29 cities
• develop 1,000 km of new toll roads Sulawesi, and Kalimantan: • develop Mass Rapid Transit
• rehabilitate 46,770 km of existing  2,159 km inter-urban railways (MRT) in 6 metropolis and 17
road  1,099 km urban railways large cities.

Energy Related
Achieve electrification ratio of 96.6% by Achieving food sovereignty through Ensure efficiency of fuel production
2019 through generating capacity irrigation system improvement by optimizing
improvement • develop 33 new dams and 30 domestic refineries
• develop power plants with total hydropower plants • build new oil refineries of
capacity of 35,000 MW • expand 1 million ha irrigation system 2x300,000 barrels
• rehabilitate existing irrigation system • Expand existing refineries in 5
locations
9
 Reformed Actions by the Government to Accelerate the
Delivery of Infrastructure Projects
Fiscal reforms Institutional reforms Regulatory reforms

• Investing in Indonesian infra- • Indonesia suffered a lack of • Regulatory reforms are the
structure has been regarded leadership to implement the backbone of long-term
issues

as risky with uncertain returns

changes needed for the structural change. Indone-
on investment.
infrastructure sector to grow sian regulatory corpus has
• Indonesia did not have any been characterized by some
fiscal mechanisms that could ambiguities and conflicting
support the development of
infrastructure investment regulation

Fiscal support and necessary 1. PT Sarana Multi Infrastruktur (SMI) – Presidential decree and government
regulations have been issued to Infrastructure invesment company regulations are issued to accelerate
Reforms

improve project attractiveness to 2. PT Penjaminan Infrastruktur permits and licenses, such as :

private investors:
1. Government guarantee
2. Viability Gap Fund (VGF)
3. Availability Payment (AP)
4. Land revolving fund
Indonesia – Government
Infrastructure Guarantee Fund
3. Lembaga Manajemen Aset Negara
(LMAN) – Government Land Bank
4. Komite Percepatan Penyediaan
Infrastruktur Prioritas (KPPIP)
1. National Strategic Projects
2. Infrastructure Electricity Projects
3. Crude oil Refinery Projects
4. Direct assignments for Toll road to
State Owned Enterprise
5. Land Acquisition

Supported by improving awareness of Indonesian infrastructure issues, convergent

reforms are building a better business environment for tomorrow’s investment
10
 Committee for Acceleration of Priority Infrastructure Delivery
(KPPIP) is formed to coordinate the program
KPPIP members include ministries and institutions that
Committee
play significant roles in project preparation phase – Project
Delivery
1. Coordinating Minister of Economic Affairs
2. Coordinating Minister of Maritime Affairs
3. Minister of Agrarian and Spatial Planning
4. Minister of Finance
5. Minister of National Development Planning
Coordinating Ministry of Economic Affairs 6. Minister of Environment and Forestry

Coordinating Ministry of Maritime Affairs

Ministry of Agrarian and Spatial Planning Sector specialization

(BPN)

Ministry of Finance
1. Program Director
Ministry of National Development 2. Project Director for Energy
3. Project Director for Water Project
Planning/Bappenas Management
4. Project Director for Road and Bridges
5. Project Director for Transportation Office and
6. Project Director for Finance Legal experts
7. Project Director for Capacity Building
Ministry of Environment & Forestry 8. Procurement specialist
9. Communication specialist

1
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

12
Indonesia’s National Strategic Projects

Government has issued the Presidential Regulation No 3/2016 and Presidential

Instruction No 1/2016 for National Strategic Projects. The President Regulation
identify 225 projects and 1 electricity program, which have strategic values.
For the process, the Committee for Acceleration of Priority Infrastructure Delivery
(KPPIP) was mandated to select the National Strategic Projects, monitor, evaluate
and de-bottleneck their delivery.

Indonesian National Strategic Projects Distribution

Infrastructure
Projects Roads Railways Airports Ports Housing Energy

52 19 17 13 3 7

Border Indus-
Clean Tech-
National water
Develop- Dams
nology
trial Mining
Strategic ment Estates
Projects (225 10 7 60 3 25 6
projects and 1
35GW Agraria & Fisheries Electricity
program) 3 1 Program

13
Progress of National Strategic Projects based on Presidential
Decree No:3 year 2016
TOTAL PROJECT

TOTAL PREPARATION TRANSACTION CONSTRUCTION COMPLETED NOT CLEAR

Toll road 52 2 9 34 7 2

Railway 19 9 - 9 - 1

Airport 17 2 - 4 6 5

Sea port 13 8 - 2 1 2

Housing 3 - - 1 - 2

Energy 7 3 - - 1 3

Agriculture 3 - - - - 3

Clean water 10 8 1 1 - -

Industrial estate 25 16 - 8 - 1

Ports 60 21 - 32 7 5

Telecommunication 3 - 3 - -
Border crossings 7 - - 6 - 1

Smelter 6 6 - - - -
TOTAL 225 76 10 90 22 25
Palapa Ring Project – an example in Acceleration

15
Palapa Ring investor selection and financial close within
1(one) year – the fastest project in Indonesia

16
Umbulan East Java Drinking Water Project 4000 liter/s after 40
years, finally de-bottlenecked in 8(eight) months

17
Central Java 2000 MW Power Plant Project, after 5 years
debottlenecked, solved within 3(three) months

18
 Central Java to West Java 500kV Transmission line – after
6(six) years debottlenecked solved in 8(eight) months
Indramayu – Mandirancan - Pemalang – Tx Ungaran- Tanjung Jati –
Cibatu Indramayu Mandirancan Pedan – Tx Ungaran-
Baru/Deltamas Pemalang Pedan
GITET 500 kV Kit 500 kV

110 km 90 km 172 km 91 km 110 km

CIBATU U INDRAMAYU

CIBATU BARU / DELTAMAS

TANJUNG JATI B
U U

A
CIRATA PLTU JAWA-1
UJUNG PLTU
BERUNG MANDIRANCAN U U JAWA-3
A PLTU JATENG
SAGULING PEMALANG U
BANDUNG
SELATAN
UNGARAN

Tx Ungaran-Pedan
MATENGGENG
PS
AMPEL
TASIKMALAYA
RAWALO

U
U
PLTU ADIPALA PEDAN
PLTU CILACAP

Total length – 573 km

Tanjung Jati B 2000 MW reached Financial close after 3 (three)
years being bottlenecked by Transmission line land acquisition

20
Power Generation Projects which reached Financial Close
(started Construction) in 2016 tripled in 2016

10.000

8.000
6,705
6.000
4.650
4.000

2.000 1.687 1.633

632 839
482 56
0
2010 2011 2012 2013 2014 2015 2016 2017

Achieved FC Target FC in 2017

Reached Financial Close 4,650 MW,

PLTB Sidrap (70 MW), PLTU Jeneponto-2 (250 MW), PLTU Batang (2000 MW), PLTU Kalselteng-1 (200
MW), PLTU Kendari-3 (100 MW), PLTA Malea (90 MW),
PLTU Jawa-7 (2x1000 MW), PLTA Hasang (40 MW).

Sumber: Presentasi PLN 13 Januari 2017 21

Substation installation progress by PLN in 2016 is among the
highest yearly progress to date
Generation Transmission
(MW) (Kms)
4.000 3.000 2.743
3.678

3.000 2.080 1.976

2.000 1.811 1.893
2.138 2.150 1.537
1.837
2.000
1.482
1.001 1.000
1.000

0 0
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016

Substation
(MVA)
15.000 14.123

12.500
In the year 2016, there is a triple jump in
10.000
the progress of Substation installation
7.500 5.615 compared to previous years
5.000
2.550 2.810 2.600
2.500 1.215
0
2011 2012 2013 2014 2015 2016
Sumber: Presentasi PLN 13 Januari 2017 22
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

23
Declining electricity price from declining PV module cost

24
Swanson’s law on prediction PV Module cost

25
Previous Rooftop PV Economics needs to be revisited
Pertamina installed 1 MWp in Cilacap Refinery housing complex
and installed 0.6 MWp in Pertamina Jakarta Head Office

27
Re-visit of PV Rooftop economics based on latest PV Panel
cost resulting in 6 years return on investment
TMLEnergy as contractor for PT Pertamina has calculated the
latest PV rooftop economics – resulting in similar economics
Export-Import meter are commonly being installed based
on PLN regulation No: 733/2013 – to sell electricity to PLN

30
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

31
Indonesia and Australia Government cooperation to
develop Resilient Cities

32
Air conditioning using more efficient Solar Desiccant

33
Australia has implemented this technology since 2013

34
Presentation Agenda

Indonesia’s Infrastructure challenges

Reforms in Infrastructure development

Indonesian National Strategic Projects

Photo Voltaic Rooftop system

Future development

Summary

35
Summary of Presentation
• Indonesia is accelerating its Infrastructure development
through various fiscal, Institutional and Regulatory reforms
• To focus the acceleration, Indonesia has selected National
Strategic Projects
• The National Strategic Projects are targeted to improve
Logistic and Energy sectors
• In the Energy sector, Electricity Infrastructure is a key priority
• Capacities for Power Generation, Transmission and
Distribution are being installed and constructed
• For housing, in 2017 Roof Top Photo Voltaic (PV) system has
shown improvement in its economics
• Government of Indonesia and PLN is encouraging Roof Top
Photo Voltaic through its Export-Import Metering system

36
 THANK YOU

KPPIP
Menara Merdeka, 8th floor
Jl Budi Kemuliaan I No 2, Jakarta 10110
E-mail : sekretariat@kppip.go.id
Landline : +62 21 2957 3771