Perusahaan Listrik Negara (PLN), Indonesia's state-owned electricity company, stated that a total of 158.64 terawatt hours (TWh) of electricity was sold in Indonesia in the fist nine months of 2016, up 7.2 percent year-on-year (y/y) from 148.0 TWh of electricity sales in the same period of 2015. Benny Marbun, Head of PLN's Commercial Division, said rising electricity sales (as well as consumption) are the result of Indonesia's improving economy. In 2016 the nation's gross domestic product (GDP) is expected to expand 5.0 percent (y/y), from 4.8 percent (y/y) in 2015.

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Five high-profile consortia have expressed their interest to develop the USD $2 billion Java I steam & gas power plant in Muara Tawar, Bekasi (West Java). State-owned utility company Perusahaan Listrik Negara (PLN), owner of this project and the company that is responsible for distributing electricity to the nation's 255 million people, said it is scheduled to tender this mega-project in June 2016. Indonesia's electrification ratio (the percentage of Indonesian households that are connected to the nation's electricity grid) is low at around 82 percent, implying there are still dozens of millions of Indonesians who lack access to electricity.

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Demand for lighting in Indonesia will rise in line with the rising electrification ratio (the percentage of households that are connected to the nation's electricity grid). Indonesia's electrification ratio stood at 85 percent in 2015, implying there are still around 40 million Indonesians that do not have instant access to electricity. The government is eager to raise the electrification ratio and this means that demand for lighting should grow accordingly. However, a large portion of lamps/lighting that is sold in Indonesia is still imported from abroad. As such, there should be lucrative business opportunities in Indonesia's lighting industry.

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The Indonesian Coal Mining Association (APBI) advises the central government to recalculate the amount of coal required for Indonesia's 35,000 MW power plant program. According to APBI, Indonesia does not have enough coal reserves to serve as power source for this ambitious program. The program, launched by President Joko Widodo in 2015, aims to add a total of 35,000 MW to the nation's power capacity by 2019 (about 20,000 MW being coal-fired plants). PriceWaterhouseCoopers states that Indonesia may have depleted its coal reserves by the year 2033.

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While global coal prices continue to slide, there emerged some support as Indonesia is estimated to consume more coal in 2016 in its coal-fired power plants. According to Indonesia's Ministry of Energy and Mineral Resources, domestic consumption of coal will rise 7.7 percent year-on-year (y/y) to 86 million tons in 2016 from 79.8 million tons in 2015. The ministry set the domestic market obligation (DMO), the minimum amount of coal that Indonesia's coal producers need to supply to the local market, at 86 million tons. The DMO is set to ensure sufficient power generation in Southeast Asia's largest economy.

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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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Indonesia's electricity subsidies may exceed the IDR 38.39 trillion (approx. USD $2.8 billion) allocated in the 2016 State Budget as there are probably more customers entitled to electricity subsidy than previously estimated. Last month, the Indonesian government and House of Representatives (DPR) agreed on cutting electricity subsidies for 450 VA and 900 VA households, per 1 January 2016, by disconnecting those people that are currently enjoying cheap electricity rates while they are not classified as 'poor' or 'near-poor' and thus do not deserve the subsidized price.

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Statistics Indonesia (BPS) said the government's plan to cut electricity subsidies for 450 VA and 900 VA households (per 1 January 2016) is likely to lead to a higher inflation and poverty rate. Cutting the electricity subsidy bill is part of government efforts to reduce costly energy subsidies and redirect these funds to productive investments (for example infrastructure development or social welfare programs). Moreover, more than 20 million Indonesians are enjoying subsidized electricity, while they are not classified as (near) poor.

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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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On Monday (03/11), several important macroeconomic data were released by statistics Indonesia. Firstly, inflation was relatively high in October at 0.47 percent month-on-month (m/m). Secondly, Indonesia posted another trade deficit in September (USD $270 million). Thirdly, Indonesia's October manufacturing activity showed a contraction (the country’s manufacturing Purchasing Manages' Index fell to a 14-month low of 49.2 in October). Lastly, a total of 791,300 foreign tourists visited Indonesia in September.

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Coal is one of the most important commodities for Indonesia in terms of state revenue as it accounts for about 85 percent of the country's total mining revenue. Therefore, when global coal prices fell sharply from 2011 (amid a slowing global economy), Indonesia felt the impact. In a response to lower coal prices, Indonesian miners actually increased coal output thus placing more downward pressure on coal prices and profit margins. Although the coal industry will remain frail for some time to come, long-term prospects are still strong.

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As companies' financial results of 2013 slowly start to be released, two reports - so far - have raised eyebrows due to significant declines in net profit. These are publicly listed, but majority state-owned, airline Garuda Indonesia and fully state-owned electricity firm Perusahaan Listrik Negara (PLN). Both companies felt the impact of the sharply depreciating Indonesia rupiah exchange rate. The currency fell over 21 percent against the US dollar in 2013 due to capital outflows amid looming US tapering and current account deficit concerns.

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The government of Indonesia - through its Ministry of National Development Planning (known as Bappenas) - designed three funding scenarios for Indonesia's infrastructure development in the National Medium-Term Development Plan (RPJMN 2015-2019). The lack of appropriate infrastructure is one of the bottlenecks to Indonesia's development. The scenarios involve the amount of funds and other requirements for infrastructure investment. The three scenarios are divided into a 'full scenario', a 'partial scenario' and a 'baseline scenario'.

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Asep Sugiharta, an official at the Ministry of Forestry, said that a new bill has been submitted to Indonesia's parliament (DPR) which is expected to open up the potential for geothermal power development in Indonesia. Currently, geothermal exploitation is lawfully defined as a 'mining activity' (Law No. 27 2003) and therefore prohibited to be conducted in protected forest and conservation areas (Law No. 41 1999), even though geothermal mining activities have a relatively small impact on the environment (compared to other mining activities).

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Bertrand van Ee, Chairman of International engineering and project management consultancy Royal HaskoningDHV joined the Netherlands Prime Minister Rutte, Minister Ploumen and Minister Dijksma on their trade mission to Indonesia from 20 to 22 November 2013. During this visit, TIRASA and Royal HaskoningDHV signed a Head of Cooperation Agreement with the intention to collaborate in developing a total of 100 MW of small scale hydropower plants in Indonesia in the next 5 years, starting with feasibility studies in the targeted regions.

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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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The release of Indonesia's April deflation figure (0.10%) and orderly May Day demonstrations provided a good environment for investors to continue purchasing Indonesian stocks (despite uncertainty about Indonesia's subsidized fuel policy. Moreover, positive Asian stock indices - in combination with positive European openings on Wednesday - made the Indonesia Stock Index (IHSG) rise to a new record level of 5,060.92 points on Wednesday (01/05/13), a 0.53 percent gain.

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The heavily subsidized fuel price of Indonesia is likely to be raised next month according to Indonesian media sources. Various high officials, including Economic minister Hatta Rajasa, discussed the possibility to raise the fuel price from IDR 4,500 (USD $0.46) to IDR 6,500 (USD $0.67) per liter starting from May. This increase will only apply to private passenger cars, and not to motorcycles and public transportation. However, president Susilo Bambang Yudhoyono has not made up his mind yet.

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