President Joko Widodo has promised to increase power production while cutting outputs. Source: Wikimedia
Jakarta has postponed a levy on fossil fuels intended to support development of renewable power resources and improve energy security, energy minister said a day before it was scheduled to come into effect.
The move illustrates the difficulties President Joko Widodo has to overcome in devising an energy policy for Southeast Asia’s largest economy and the world’s top exporter of thermal coal, while meeting ecological commitments.
“Everyone agrees: it’s just the timing of the implementation that needs to be managed,” Energy Minister Sudirman Said announced, referring to a discussion of the matter with Widodo and other members of his cabinet.
Fuel prices are politically sensitive in the vast archipelago and hikes often spark protests and contributed to the downfall of long-serving autocrat, President Suharto, in 1998.
Widodo had requested that the levy be delayed until the revision of this year’s budget in order “to avoid controversy”, Said added. He also said the levy was needed to help bring power to 12,000 villages across the archipelago.
The government planned to introduce a 200 rupiah (US$0.01) tax per litre on sales of RON88 gasoline and 300 rupiah per litre on diesel, that would coincide with a planned reduction in fuel prices. The government, however, has decided to slice fuel prices without introducing the levy.
The tax would be applied to “all companies that manage fossil energy, including oil, gas and coal”, Said explained, noting that further details would be outlined in a government regulation. The levy on coal was due to be introduced later. The government has not said when it will revise this year’s budget.
Indonesia is the world’s fifth-largest emitter of greenhouse gases, partly fuelled by its farmers tendency to start enormous forest fires. Planning Minister Sofyan Djalil said the government wanted renewable sources to contribute 23 per cent to the country’s production by 2025, up from 6 per cent in 2014.
“New and renewable energy is expensive now, so it needs a special policy,” Djalil announced.
“How about we take some of this money [from fuel sales] to develop new and renewable energy?” the minister said. “If we don’t do this, the world will be hit with global warming.”
The new tax could add pressure to Indonesia’s coal sector and potentially reduce output further after a 16-per-cent slide last year, largely driven by low prices.
Said added that revenue raised from the tax could improve access to electricity, develop strategic energy reserves and boost the renewable energy sector.
Indonesia has pledged to cut greenhouse gas emissions growth by 29 per cent by 2030 but it also plans to develop more than 35 new power stations by 2019, almost 80 per cent of them coal-powered.
In other mixed environmental messages, on Saturday President Joko Widodo’s official Facebook page showed him setting hundreds of birds free in Bogor’s Botanical Gardens. The caption said that he bought 190 birds from Jakarta’s Pramuka bird market and released them to enable them to thrive.
Environmentalists are unlikely to be impressed as the bird market is renowned for illegal trading in endangered and protected birds and other wildlife.
A recent study by the wildlife group Traffic said around 19,000 birds from 206 species were sold in Jakarta’s three major bird markets each year. The report said: “The vast majority of the birds counted – 98 per cent – were native to Indonesia and harvested outside of the national harvest quota system or in direct violation of laws protecting select species.”