President Joko “Jokowi” Widodo gathered directors and commissioners of state-owned oil and gas holding company Pertamina and state-owned electricity company PLN only to reprimand them for their tardiness in responding to investor interest in Indonesia. The President also demanded they speed up the energy transition in Indonesia.

“The [investors] who want to invest in Pertamina and PLN are many, but the complexity is with our bureaucracy, with our state-owned enterprises,” he told Pertamina and PLN directors and commissioners, citing PT Trans-Pacific Petrochemical Indotama’s (TPPI) US$4.5 billion petrochemical project and the Pertamina-Rosneft fuel refinery project – both in Tuban, East Java – as an example of tardiness.¹ 

He recollected that after being inaugurated as president back in 2014, the first project he visited was the TPPI complex in Tuban as he believed that this project, when completed, would save a lot of foreign reserves of about US$4.4 billion per annum by reducing petrochemical imports. And yet, seven years on, the project has not been completed.

Pertamina acquired TPPI in 2019 and is working to expand it in order to enable it to meet domestic demand. There are two ongoing projects under TPPI’s Olefin Complex Development Project (OCDP). The first is a revamped project that will expand TPPI’s production capacity of paraxylene – a key ingredient in polyester textiles – from 600,000 tons to 780,000 tons per year. The second project is a new olefin project that would enable TPPI to produce 1 million tons of polyethylene (PE) and 600,000 tons of polypropylene (PP). The projects are targeted to be completed by 2022 and 2024, respectively.

The OCDP project has recently attracted controversy over the selection of a consortium led by JO Hyundai Co Ltd (Hyundai Engineering) to develop the project. Pertamina chief commissioner Basuki “Ahok” Tjahaja Purnama asked Pertamina’s management to restart the tender, but the management ignored the demand as it got the backing from State-Owned Enterprises Minister Erick Thohir.

Jokowi also highlighted the Tuban refinery, which he said had not made good progress. He said, initially Russian oil company Rosneft wanted to invest Rp 168 trillion, but the slow progress had slowed down investment realization. Pertamina and Rosneft signed a joint agreement in 2016 to build the Tuban refinery, which will have a total capacity of processing 300,000 barrels of crude oil per day. The refinery will be integrated with TPPI’s OCDP.

Fresh from a global climate conference in Glasgow, the United Kingdom, Jokowi also told Pertamina and PLN directors to prepare detailed plans for energy transition, especially from coal to renewable energy. Jokowi acknowledged Indonesia’s heavy reliance on coal to produce electricity. According to the President, coal accounts for 67 percent of Indonesia’s total energy supply, with 15 percent from other fossil fuels and 8 percent from gas. He warned global investors would eventually shun Indonesia if the country continued to burn coal for electricity.

“The energy transition must be prepared. PLN, Pertamina have to aim for green energy and that has to be prepared from now on. Not only the macro plan, but the detailed plans […] For example, in 2022, 5,000 megawatts of electricity from coal must be replaced with hydro, geothermal and solar energy,” Jokowi told the Pertamina and PLN directors and commissioners.