A consortium consisting of Indonesia's state-owned oil & gas company Pertamina and Japan-based general trading company Marubeni Corp has teamed up with American multinational conglomerate corporation General Electric (GE) to bid for success in a USD $2 billion power plant project in Bekasi (West Java) tendered by Indonesia's state-owned utility company Perusahaan Listrik Negara (PLN). Reportedly, this 1,600 MW power plant, named Jawa I, is set to become the largest gas and steam power plant in Indonesia.

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Indonesia's push for usage of renewable energy sources, particularly geothermal energy, at the expense of usage of fossil fuels (such as oil or coal) has experienced a setback as there has been an impasse between state-owned electricity company Perusahaan Listrik Negara (PLN) and Pertamina Geothermal Energy (PGE), a subsidiary of state-owned energy company Pertamina regarding the renewal of their power purchase deal for electricity generated by PGE's Lahendong and Kamojang plants. The existing deal expires at the end of the year.

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Credit rating agency Standards & Poor's (S&P) says Indonesia (and Malaysia) need to increase efforts to build a good track record of timely and reasonable power tariffs adjustments in order to ensure decent returns for investors and recover their costs. Delays in energy price revisions, which are sometimes the result of political strategy, are the key risk that jeopardize the financial stability (and credit profile) of state-owned utility company Perusahaan Listrik Negara (PLN). S&P therefore advises the Indonesian government to enhance efforts to ensure a sound regulatory framework (i.e. a transparent tariff rate-setting mechanism).

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Despite having abundant natural resources at its disposal (including coal and gas), Indonesia has difficulty to supply enough electricity to its people and businesses. Robust economic growth over the past decade has given rise to increased domestic demand for electricity but the country has not been able to adequately meet demand resulting in frequent blackouts and in one of the lowest electrification rates (the percentage of Indonesian households connected to the nation's electricity grid) in the region (about 80.4 percent at end-2013).

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On 10 August 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such as economic growth in the second quarter, July inflation, the June trade balance, company profiles of PP London Sumatra Indonesia and Perusahaan Listrik Negara, guidelines for the construction of a PT PMA, and more.

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Perusahaan Listrik Negara (PLN), the state-owned utility company that has a monopoly on the distribution of electricity in Indonesia, recorded a 158 percent growth (year-on-year) in net profit to IDR 12.3 trillion (USD $1.1 billion) in the first half of 2014 due to improved operational efficiency and a foreign-exchange gain of IDR 4.4 trillion (USD $376 million). Meanwhile, the company's revenue increased 24 percent to IDR 145.1 trillion (USD $12.4 billion) as electricity sales increased and PLN received more subsidies from the Indonesian government.

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Indonesian state-owned electricity firm Perusahaan Listrik Negara (PLN) said that Indonesia - Southeast Asia's largest economy - is expected to nearly double domestic consumption of thermal coal over the next eight years in an attempt to meet the nation's growing electricity demand. Moreover, coal, of which the country has huge reserves at its disposal, is regarded a better fuel source in electricity generation compared to expensive diesel. At present, many power stations in Indonesia are still diesel-powered.

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General Electric (GE), one of the largest American multinational conglomerates, has already started to show its commitment to invest in Indonesia. Over the course of three years, the company will invest USD $300 million in Southeast Asia's largest economy. CEO of General Electric Indonesia, Handry Satriago, stated that - although the year 2013 was a year full of challenges - the company managed to record revenues worth about USD $1 billion and aims to reach double-digit growth in 2014.

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Indonesia Investments added the preliminary company profile of Exploitasi Energi Indonesia. The company, a vertically-integrated energy company, is engaged in coal production & trading, coal logistics & transportation, and power generation. Currently, most of its revenue is derived from its coal mining activities. However, in the years ahead it intends to focus more on turning electricity generation into its main source of revenue. It has a long-term coal supply contract with state electricity company Perusahaan Listrik Negara (PLN).

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Perusahaan Listrik Negara (PLN) is the state-owned company (SOE) that holds the monopoly on the distribution of electricity in Indonesia. The company is the second-largest SOE by assets after energy company Pertamina. Total capacity of PLN’s power plants at end-2012 have grown to 32.901 MW. The company is tasked to increase Indonesia's electrification ratio (the percentage of Indonesian households that are connected to the nation's electricity grid) to 90 percent by 2020. Currently, the ratio is around 77 percent.

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State-owned electricity provider Perusahaan Listrik Negara (PLN) stated that consumption of electricity in Indonesia grew 7.2 percent to 90,48 terawatt hour (twh) in the first six months of 2013 compared to the same period last year. Head of PLN's Commercial Division, Benny Marbun, explained that Indonesia's industrial sector particularly consumed more electricity. Although industrial customers of PLN only grew by 4.5 percent in Semester 1-2013 (YoY), industrial electricity consumption grew 8.3 percent (YoY).

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Data released by a department of Indonesia's Ministry of Finance showed that the country's budget deficit amounted to IDR 25.9 trillion (USD $2.64 billion) on 31 May 2013. This figure is equivalent to 16.9 percent of the target that is set in the 2013 State Budget (IDR 153.3 trillion). The IDR 25.9 trillion deficit translates to 0.27 percent of Indonesia's gross domestic product (GDP). The maximum amount of deficit - as stipulated by the State Budget Law of 2013 - that is allowed to be maintained is equivalent to 1.65 percent of GDP.

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