Indonesia’s Energy Sector at a Turning Point: Prabowo’s Vision

As Prabowo Subianto prepares to take office as Indonesia’s President in October, the energy sector stands on the brink of significant transformation. Prabowo’s campaign promises and political trajectory suggest a shift towards making Indonesia a “green energy superpower.” This vision includes advancing bioenergy, hydro, wind, wave, solar, and geothermal power, aiming for energy self-sufficiency. The campaign’s platform also outlines plans for reducing red tape in the renewable energy industry, incentives for energy reserve discoveries, construction of hydropower dams, and revitalization of forests for bioethanol production.

Continuity and Change: Foreign Investment and Economic Policies

Continuity from President Jokowi’s administration is expected, with a continued openness to foreign investment in natural resources, infrastructure, and energy transition critical areas. Prabowo’s pragmatic investment strategy is anticipated to maintain a conducive operating environment, relying on foreign capital and technology. However, a shift towards increased state spending in the energy sector, particularly on infrastructure and renewable energy projects, could mark a departure from Indonesia’s traditionally conservative public expenditure patterns.

The Growing Influence of SOEs and Domestic Conglomerates

The influence of state-owned enterprises (SOEs) and local conglomerates within the energy and natural resources sector is expected to grow under Prabowo’s leadership. This trend aligns with his advocacy for self-sufficiency and sovereignty in strategic industries. Policies may prioritize domestic players in developing downstream natural resources industries, boosting oil and gas production, and accelerating the energy transition.

Decarbonization and the Coal Industry’s Role

While decarbonization is set to be a key theme of Prabowo’s presidency, the entrenched interests of the powerful coal industry present a challenge. Balancing the coal industry’s significance as a national revenue source and energy provider with the imperative for renewable energy adoption will be a delicate task. The direction of renewable energy policy and the role of investments in carbon capture and storage will be crucial areas to watch.

Regulatory Framework and Energy Sector Impacts

The implementation of sensitive regulations, especially those impacting the energy sector’s regulatory framework, may be postponed until the Prabowo administration is firmly established. This could affect the pace of new energy technology adoption and the transition towards greener energy sources.

In conclusion, the energy sector in Indonesia approaches a period of cautious optimism under Prabowo’s administration. Stakeholders should prepare for both opportunities and challenges, closely monitoring the administration’s policy direction and strategic priorities.