New energy duo bring back hope despite sector jitters

Newly appointed Energy and Mineral Resources Minister Ignasius Jonan and deputy Arcandra Tahar will have to roll up their sleeves to complete the myriad of tasks waiting at the ministry, which has ran without definitive leadership for the past couple of months. During the vacuum, which began after the dismissal of Arcandra following public controversy surrounding his US citizenship, interim minister Luhut Pandjaitan, who also serves as coordinating maritime affairs minister, quickly took it upon himself to clear up several issues clouding the energy and mining sector. However, issues remain aplenty. Indonesia’s oil and gas industry is suffering from a lack of investment and exploration amid continued low global oil prices, with many firms cutting jobs and capital spending around the country Meanwhile, the mining and smelter industries have been closely watching the government’s flip-flopping policies surrounding an impending ban on unprocessed mineral ore.

Furthermore, the government has also been struggling to procure 35,000 megawatt of additional electricity for the country by the end of 2019, an ambitious target set by President Joko “Jokowi” Widodo last year. Jakarta-based think-tank Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa hoped that Jonan, who served as transportation minister until the second Cabinet reshuffle in July, would understand business culture and expectations as well as government regulations. “Mr Jonan’s background as a banker will help him identify funding options to build energy infrastructure and determine regulations, which will help mitigate business risks,” he told. Fabby also expressed hopes that Jonan would pay more attention toward renewable energy, which has remained underdeveloped despite the governments efforts to incorpo- rate it into current and future electricity procurement programs. Arcandra’s reappointment to a government position has not been as well received. During his short tenure as energy and mineral resources minister, Arcandra expressed his commitment to ensuring that the revision ofthe Oil and Gas Law, which will be drafted by lawmakers, offers incentives to entice business players to invest in non-conventional exploration methods in order to salvage Indonesia’s depleted reserves. However, ReforMiner Institute researcher Pri Agung Rakhmanto was doubtful that Arcandra, who has several international patents in offshore fields, would be able to improve the investment climate of Indonesia’s oil and gas sector as he had little experience in either government or the business side of the upstream sector. “With all due respect, the whole of the oil and gas upstream sector is not the same as mere offshore construction.

It is only a small part of the upstream sector,” he said, adding that the Jonan-Arcandra partnership was unlikely to be revolutionary due to their lack of experience in the country’s energy sector. IESR’s Fabby also questioned Jokowi’s decision to install Arcandra as deputy minister as his citizenship controversy earlier in the year would still cause uncertainty among energy and mining investors. Indonesian law does not allow its citizens to posses dual citizenship.

President Jokowi, meanwhile, described his decision to appoint Jonan and Arcandra to lead the ministry as purely professional. “I believe that both are professional figures who have the courage and competence to carry out major overhaul within the ministry,” he told reporters on Friday after Jonan’s and Arcandra’s inauguration ceremony. Business players, meanwhile, seem to be a little more optimistic that the collaboration of the new pair will bear fruit. Processing and Smelting Association (APSI) deputy chairman Jonatan Handojo said that Jonan’s reputation for being a stickler for regulations may mean that the government’s plan to relaxan impending ban on mineral ore exports will be revoked. “Of course we want the export ban to remain in effect and we are sure that he will uphold it. He showed right from the beginning that he stuck to rules and regulations,” he said. Meanwhile, Indonesian Petroleum Association (IPA) executive director Marjolijn Wajong declined to give her thoughts on the pair’s potential performance. The IPA has long been pushing for the reinstatement of an assume-and-discharge system during oil and gas exploration and exploitation stages. The previous system was nixed in 2010 in favor of cost recovery - the reimbursement scheme for oil and gas production and exploration costs. “The IPA will work with both the new minister and deputy minister in order to improve the oil and gas industry,” she said.

Source : Jakarta Post, Page : 13, Saturday, Okt, 15, 2016