GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA

NUMBER 79 OF 2014

REGARDING

NATIONAL ENERGY POLICY

BY THE GRACE OF THE GOD ALMIGHTY

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering:

a. Whereas in order to implement the provision of Article 11 paragraph (2) of Law

Number 30 of 2007 regarding Energy, it is necessary to develop the national

energy policy;

b. Whereas draft of the national energy policy has obtained the approval of the

House of Representative of the Republic of Indonesia through Decision of the

House of Representative of the Republic of Indonesia Number 01/DPR

RI/III/2013-2014;

c. Whereas based on the considerations as referred to in letter a and letter b, it is

necessary to stipulate a Government Regulation regarding National Energy

Policy.

In view of:

1. Article 5 paragraph (2) of the 1945 Constitution of the Republic of Indonesia;

2. Law Number 30 of 2007 regarding Energy (State Gazette of the Republic of

Indonesia Year 2007 Number 96, Supplement to the State Gazette of the

Republic of Indonesia Number 4796).

 DECIDES:

To Stipulate:

GOVERNMENT REGULATION REGARDING NATIONAL ENERGY POLICY

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Government Regulation, the following definitions shall apply:

1. Energy shall mean the capacity to perform work that may take the form of heat,

light, mechanics, chemical, and electromagnetic.

2. Energy Sources shall mean anything that can produce energy, both directly and

indirectly, through conversion or transformation processes.

3. Energy Resources shall mean the natural resources that can be utilized, both as

Energy Source and Energy.

4. New Energy Sources shall mean the energy sources that can be produced

through new technologies, coming from both Renewable Energy Sources and

Non-renewable Energy Sources, such as nuclear, hydrogen, coal bed methane,

liquefied coal, and gasified coal.

5. New Energy shall mean the Energy coming from New Energy Sources.

6. Renewable Energy Sources shall mean the Energy Sources produced from

Sustainable Energy Resources if well managed, such as geothermal, wind,

bioenergy, sunlight, water flow and waterfall, and the movement and difference of

sea layer temperature.

7. Renewable Energy shall mean the energy coming from Renewable Energy

Sources.

8. Management of Energy or Energy Management shall mean implementation of

the activity of provision, exploitation and utilization of Energy, and the provision of

Strategic Reserves and Conservation of Energy Resources.

9. Energy Independence shall mean ensuring the availability of Energy by utilizing

the full potential of domestic sources.

10. Energy Security shall mean a condition where the availability of Energy and

access to energy at affordable prices in the long term with due regard to the

protection of the environmental protection, is ensured.

11. Energy Conservation shall mean a systematic, planned and integrated effort

intended to preserve domestic Energy Resources and to improve efficiency in

their utilization.

12. Conservation of Energy Resources shall mean the Management of Energy

Resources that ensures their utilization and supply by continuing to maintain and

improve their quality of the value and diversity.

13. Environment means a spatial unit with all objects, capacities, conditions, and

living creatures, including human beings and their behaviors, which affect the life

and well-being of human beings and other living creatures.

14. Independence of the Management of Energy shall mean the quality of Energy

Management that wholly oriented to national interest in order to ensure that the

Energy, Energy Sources, and Energy Resources are best managed for the

greatest prosperity of the people, by giving maximum priority to human resource

capability and the domestic industry.

15. Utilization of Energy or Energy Utilization shall mean any activity using energy,
 both directly and indirectly, from the Energy Sources.

16. Energy Industry shall mean all industries engaged in the production and sales of

Energy, including the activity of exploitation of Energy Sources, manufacture,

management, transmission and distribution.

17. Provision of Energy shall mean any activity or process of providing Energy, both

from domestic and overseas.

18. Primary Energy shall mean the Energy provided by the Nature and has not

undergone further processing.

19. Final Energy shall mean the Energy that may be directly consumed by end user.

20. Energy Elasticity shall mean the comparison between development rate of

Energy needs and economic development rate.

21. Energy Intensity shall mean the total amount of Energy consumption per unit of

gross domestic product.

22. Energy Reserves shall mean Energy Resources with location, quantity and

quality that have been known.

23. Strategic Reserves shall mean the Energy Reserves for the future.

24. Energy Buffer Reserve shall mean quantity of the availability of Energy Sources

and Energy stored nationally, which is required to meet the national Energy

needs in a specific period.

25. Energy Diversification shall mean diversification of the utilization of Energy

Sources.

26. Electrification Ratio shall mean the comparison between the amounts of

household using electricity with total amount of households.

27. Business Entity shall mean a company in the form of a legal entity that runs a

continuous and permanent business and is established in accordance with the

 laws and regulations and is operational and domiciled within the territory of the

Unitary State of the Republic of Indonesia

28. Central Government, hereinafter referred to as Government, is the President of

the Republic of Indonesia who holds the authority to govern the Republic of

Indonesia as intended by the 1945 Constitution of the Republic of Indonesia.

29. Regional government shall mean the governor, regent, or mayor and regional

instrumentalities as the elements of the regional government administration.

30. National Energy Council shall mean a national, independent and permanent

institution in charge of the execution of the national energy policy.

31. The Ration of Household Gas Usage shall mean the comparison between the

amounts of households using gas with total amount of households.

Article 2

National Energy Policy is a policy for the Management of Energy that is based on the

principles of justice, sustainability and environmentally insightful, to create the Energy

Independence and national Energy Security.

Article 3

(1) National Energy policy as intended in Article 2 consists of the primary policy and

supporting policy.

(2) The primary policy as intended in Paragraph (1) shall include:

a. Availability of Energy for national needs;

b. Energy development priorities;

c. Utilization of national Energy Resources;

d. National Energy Reserves.

(3) The supporting policy as intended in Paragraph (1) shall include:

a. Energy Conservation, Conservation of Energy Resources and Energy

Diversification;

b. Environmental and safety;

c. Energys price, subsidies and incentives;

d. Infrastructure and public access to Energy and Energy Industry;

e. Research, development and application of the technology of Energy; and

f. Institutionalization and funding.

Article 4

National energy policy as intended in Article 2 and Article 3 is implemented for the

period of year 2014 to 2050.

CHAPTER II

GOALS AND OBJECTIVES

Section One

Goals

Article 5

National energy policy is structured as a guideline to provide direction for national

Energy Management so as to materialize the Energy Independence and national

Energy Security in support of a sustainable national development.

Article 6
Energy Independence and national Energy Security as intended in Article 5 will be

achieved by materializing the followings:

a. Energy Resources shall not be used as mere export commodities but as a

capital for national development;

b. The independence of Energy Management;

c. The availability of Energy and fulfillment of the needs for domestic Energy

Sources;

d. Optimal, integrated and sustainable management of Energy Resources;

e. Efficient utilization of Energy in all sectors;

f. Public access to energy fairly and equitably;

g. Development of technology ability, Energy Industry and Energy service

domestically, so that it will be independent and improve the human resources

capacity;

h. Creation of employment opportunity; and

i. Preservation of the Environment

Section Two

Objectives

Article 7

Energy Sources and/or Energy Resources are intended as capital development for

the greatest welfare of the people, by optimizing their use for national economic

development, creation of value added domestically and creation of employment.

Article 8
Objectives of the provision and utilization of Primary Energy and Final Energy are as

follows:

a. Fulfillment of the provision of Primary Energy around 400 MTOE (four hundred

million tonnes of oil equivalent) by the year 2025, and around 1.000 MTOE (a

thousand million tonnes of oil equivalent) by the year 2050;

b. Achieving utilization of Primary Energy per capita around 1,4 TOE (one point

four tonnes of oil equivalent) by the year 2025 and around 3,2 TOE (three

point two tonnes of oil equivalent) by the year 2050;

c. Fulfillment of the provision of electricity generation capacity around 115 GW (a

hundred and fifteen gigawatt) by the year 2025 and around 430 GW (four

hundred and thirty gigawatt) by the year 2050; and

d. Fulfillment of the utilization of electricity per capita around 2.500 KWh (two

thousand and five hundred kilowatt hours) by the year 2025 and around 7.000

KWh (seven thousand kilowatt hours) by the year 2050.

Article 9

For the fulfillment of the Provision of Energy and Utilization of Energy as intended in

Article 8, the following achievements of the national energy policy objective are

required:

a. Realization of a new paradigm that Energy Source is the capital for national

development;

b. Achievement of Energy Elasticity smaller than 1 (one) by the year 2025,

aligned with the target for economic growth.

c. Achievement of reduction of Energy Intensity amounting to 1% (one percent)

per year until the year of 2025;

d. Achievement of Electrification Ratio amounting to 85% (eighty five percent) by

the year 2015 and approaching 100% (a hundred percent) by the year 2020;

e. Achievement of household gas usage ratio amounting to 85% (eighty five

percent) by the year 2015; and

f. Achievement of an optimal Primary Energy mix:

1. By the year 2025, the roles of New Energy and Renewable Energy are

at least 23% (twenty three percent), and by the year 2020 are at least

31% (thirty one percent), insofar as their economics are fulfilled;

2. By the year 2025, the role of crude oil is less than 25% (twenty five

percent), and by the year 2050 is less than 20% (twenty percent);

3. By the year 2025, the role of coal is minimum 30% (thirty percent), and

by the year 2050 is minimum 25% (twenty five percent);

4. By the year 2025, the role of natural gas is minimum 22% (twenty two

percent), and by the year 2050 is minimum 24% (twenty four percent)

CHAPTER III

DIRECTION FOR THE NATIONAL ENERGY POLICY

Part One

Primary Policy

Paragraph 1

Availability of Energy for National Needs

Article 10
(1) Availability of Energy for national needs is fulfilled through:

a. Improving the exploration of Energy resources, potential and/or proven

reserve, both from fossil and New Energy and Renewable Energy;

b. Improving the production of Energy and Energy Source domestically

and/or from overseas sources;

c. Improving the reliability of production, transportation and distribution

system for the Provision of Energy;

d. Reducing the export for fossil Energy, particularly gas and coal, gradually

and determining time line to start stopping export;

e. Materializing the balance between rate of increase of fossil Energy

Reserve with maximum production rate; and

f. Ensuring the security of carrying capacity of the Environment to ensure the

availability of water and geothermal Energy Sources.

(2) In materializing the availability of Energy for national needs as intended in

Paragraph (1), should there is an overlap of land use in the Provision of Energy,

the one with higher national defense and/or strategic value shall take the

precedence.

Paragraph 2

Priority for the Development of Energy

Article 11

(1) Priority for the development of Energy shall be done through the followings:

a. Development of Energy by taking into account the economic balance of

Energy, the security of energy Supply and preservation of the

 Environment;

b. Prioritizing the Provision of Energy for people who do not have access to

electricity and household gas Energy, and Energy for transportation,

industry and agriculture;

c. Development of Energy by prioritizing local Energy Resources;

d. Development of Energy and Energy Resources is prioritized to fulfill the

needs for energy domestically; and

e. Development of industry with high needs of Energy is prioritized in areas

rich with Energy Resources.

(2) In order to materialize the economic balance of Energy as intended in

Paragraph (1) letter a, priority for the development of national Energy shall be

based on the principles of:

a. Maximizing the use of Renewable Energy by taking into account its

economic value;

b. Minimizing the use of crude oil;

c. Optimizing the utilization of natural gas and New Energy; and

d. Using coal as the mainstay of the nations Energy supply.

(3) The provisions intended in Paragraph (2) is exempted for nuclear Energy that is

utilized by considering the security of national Energy supply in a large scale,

reducing carbon emission, and by give priority to the potential of New Energy

and Renewable Energy pursuant to their economic values, and considering it as

the last option by taking into account the security factors strictly.

Paragraph 3

Utilization of National Energy Resources

 Article 12

(1) Utilization of national Energy Resources carried out by the Central Government

and/or Regional Government refers to the following strategies:

a. Utilization of Renewable Energy Sources from the kind of Energy of water

flow and waterfall, geothermal Energy, Energy from the movement and

difference of sea layer temperature, and wind Energy is directed for

electricity power;

b. Utilization of Renewable Energy Sources from the kind of solar Energy is

directed for electricity power, and non-electricity Energy is for industry,

household and transportation;

c. Utilization of Renewable Energy Sources from the kind of biofuels is

directed to replace fuel oil, primarily for transportation and industry;

d. Utilization of Renewable Energy Source from the kind of biofuels is carried

out by keep maintaining the food security;

e. Utilization of Renewable Energy from the kind of biomass and waste is

directed for electricity power and transportation;

f. Utilization of crude oil is only for transportation and commercial that can

not be replaced yet with other Energy or Energy Sources;

g. Utilization of geothermal Energy Source for industry, electricity power,

household and transportation is prioritized for utilization with the highest

value added;

h. Utilization of coal Energy Sources is for electricity power and industry;

i. Utilization of New Energy Source in liquid form, namely liquefied coal and

hydrogen is for transportation;

 j. Utilization of New Energy Source in solid and gas for is for electricity

power;

k. Utilization of Energy Sources in liquid form, aside of liquefied petroleum

gas, is directed for transportation sector;

l. Utilization of Energy Source of the movement and difference of sea layer

temperature is encouraged by developing a pilot as the first step, which is

connected with electric network

m. Utilization of solar Energy Source through the use of solar cells in

transportation, industry, commercial building and household; and

n. Maximization and the obligation to utilize solar Energy Source is

performed under condition that all the component and system for solar

Energy generator from upstream to downstream are gradually produced

domestically.

(2) Utilization of national Energy Resources is prioritized to meet the needs for

Energy and Raw Material.

(3) Priority for the utilization of national Energy Resources is carried out on the

basis of a thorough consideration over [their] capacity, continuity, economic and

Environmental impact.

Paragraph 4

National Energy Reserve

Article 13

National Energy Reserve includes:

a. Strategic Reserve;
 b. Energy Buffer Reserve; and

c. Operational Reserve.

Article 14

(1) Strategic Reserve as intended in Article 13 letter a is regulated and allocated by

the Government to ensure long term Energy Security.

(2) Strategic Reserve as intended in paragraph (1) can only be cultivated in

accordance with the time line that has been established or at any time required

for the national interest.

(3) Further provisions concerning management of the Strategic Reserve will be

regulated in a Presidential Regulation.

Article 15

(1) Energy Buffer Reserve as intended in Article 13 letter b is provided to ensure

the national Energy Security in accordance with the national Energy efficiency

policy, primarily through fuel oil and electricity subsidy policy that is right on

target.

(2) Energy Buffer Reserve as intended in Article (1) is provided by the Government

with the following conditions:

a. Energy Buffer Reserve is a reserve outside of the operational reserve

provided by the Business Entity and Energy Industry;

b. Energy Buffer Reserve shall be used to overcome the Energy crisis and

emergency situation; and

c. Energy Buffer Reserve is provided gradually in accordance with

economic condition and financial capability of the State.

(3) National Energy Council shall regulate the type, amount, time and location of

the Energy Buffer Reserve.

(4) Management of Energy Buffer Reserve is carried out in accordance with the

provisions of the laws and regulations.

Article 16

(1) Business Entity and industry that supplies Energy are obliged to provide

operational reserve to ensure continuity of the Energy supply.

(2) Further provision concerning the provision of operational reserve as intended in

Paragraph (1) will be regulated by the Government.

Part Two

Supporting Policies

Paragraph 1

Energy Conservation, Conservation of Energy Resources,

and Diversification of Energy.

Article 17

(1) Energy Conservation is carried out both from upstream to downstream

encompassing the management of Energy Resources and all exploration

phases, production, transportation, distribution, and utilization of Energy and

Energy Sources.

(2) The Management of Energy Resources as mentioned in paragraph (1) is

directed to ensure that the provision and utilization of Energy Resources keep
 maintaining and improving the value quality and diversity of the respected

Energy Resources.

(3) Conservation of Energy Resources is performed in the manner of cross-sectoral

approach, which is at least being adjusted to national spatial and environmental

capacity.

(4) The Conservation of Energy Resources as meant in paragraph (3), in the

Provision of Energy, prioritizes Energy Resources that are more sustainable.

(5) Both producer and consumer of Energy shall perform Energy Conservation and

efficiency in the management of Energy Resources to ensure the availability of

Energy in long terms.

(6) Energy Conservation in industrial sector is performed by taking competitiveness

into account.

(7) The Government and/or Local Government within its authority develops the

guidelines and implementations of the policies on Energy Conservation,

especially on the field of Energy Saving that is at least covering the following:

a. The obligation of standardization and labeling on the entire equipment of

Energy user;

b. The obligation of Energy Management including Energy audit to Energy

user;

c. The obligation of using efficient power plant technology and Energy

Conservation equipment;

d. Promoting Energy saving culture;

e. Establishing business climate on Energy services both for investors and

energy providers in efficient manners;

f. Expediting the implementation of and/or conversion to mass

 transportation system, either within city or inter-cities in efficient manners;

g. Expediting the implementation of pay road (electronic road pricing) to

reduce traffic jam that is caused by private vehicles; and

h. Determining gas consumption target in transportation sector in accurate

and gradually manners in effort to improve efficiency.

Article 18

(1) The Government and/or Local Government within its authority shall perform the

Energy Diversification to improve the Conservation of Energy Resources and

National Energy Resilience.

(2) Energy Diversification as mentioned in paragraph (1) is performed at least by:

a. Expediting the provision and utilization of various types of New Energy

Resources and Renewable Energy Sources;

b. Expediting the substitution from oil to gas in private and transportation

sectors;

c. Expediting electric utilization for the motor of vehicles;

d. Expanding the utilization of low quality coal for steam power plant in mine

mouth, gasified coal (gasified coal) and liquidized coal (liquefied coal);

and

e. Expanding the utilization of mid and high quality of coal for domestic

power plant.

Paragraph 2

Environment and Work Safety

 Article 19

(1) The Management of National Energy shall be in line with the sustainable

national development direction, the sustainability of natural resources, Energy

Resources Conservation, and the controlling of Environmental pollution.

(2) The activities of the National Energy Management shall consider health, work

safety and social impact factors by also maintaining Environmental functions.

(3) Each activity of Energy Provision and Utilization shall:

a. perform preventions, reductions, countermeasures, and restorations, as

well as fair compensations to the affected parties;

b. minimize waste, reuse waste for production process and for other

benefits, and extract waste elements that still have advantages, by also

taking heed of its social, environmental and economical aspects; and

c. prioritize the use of environmental-friendly technologies.

(4) Every operation of nuclear installation shall take care of safety and accident

risks and provide compensation to third parties who suffered loss caused by

nuclear accidents.

(5) The implementation of Environmental Management and Work Safety in the

activities of National Energy Management, Energy Provision, and Energy

Utilization as governed in paragraphs (1), (2), (3), and (4) shall be carried out

based on the prevailing laws and regulations.

Paragraph 3

Price, Subsidy and Energy Incentive

Article 20
(1) Energy Price shall be determined based on Fair Economical Value.

(2) Price of Renewable Energy shall be based on:

a. the calculation of Renewable Energy price using assumption to compete

the price of Energy from Oil Sources that is applied within a region in a

certain time period, by not adding fuel subsidy; or

b. the calculation of Energy price that is deemed rational for the provision of

Renewable Energy from local sources in order to secure the supply of

Energy in location that is remote, not developed, vulnerable to weather

interference, or adjacent to the limit zone of the Unitary State of the

Republic of Indonesia.

(3) The Government regulates domestic coal prices until the efficient market

established.

(4) The Government shall establish electric power market at least through:

a. determining the prices of certain Primary Energies such as coal, gas,

water and geothermal for power plant;

b. determining electric rate progressively;

c. applying feed in tariff mechanism in determining the selling price of

Renewable Energy; and

d. perfecting the Management of Geothermal Energy through risk

distribution among electric procurers and developers.

(5) The Government regulates the market of Renewable Energy, including

minimum electric power, liquid fuels and gas from New Energy and Renewable

Energy quotas.

Article 21
(1) Subsidies are provided by Government and Local Government.

(2) Subsidy as mentioned in paragraph (1) is given in the event that:

a. the implementation of Fair Economical Value as governed in Article 20

paragraph (1) cannot be performed; and/or

b. the price of Renewable Energy as mentioned in Article 20 paragraph (2)

letter b is more expensive than the unsubsidized fuel prices.

(3) The subsidy provision as mentioned in paragraph (1) has to be accurately

performed to poor community.

(4) The reduction of fuel and electric subsidy is carried out gradually until the

people's buying power met.

Article 22

(1) The Government and Local Government gives both fiscal and non-fiscal

incentives to support Energy Sources Diversification and Renewable Energy

Development.

(2) The Government and Local Government gives incentives to the development,

commercialization and utilization of Renewable Energy, especially for small-

scale and remote area until its economical value is deemed competitive

compared to the conventional energy

(3) The Government gives incentive to both Energy Producers and Consumers who

performed the obligation of Energy Conservation and Efficiency, and

disincentives to the parties who did not perform such obligations.

(4) The Government gives incentive to privates or individuals who developed the

core either in New Energy or Renewable Energy field.

(5) The giving of incentives is carried out in compliance with the prevailing laws and

regulations.

Paragraph 4

Infrastructures, Community Access, and Energy Industries

Article 23

(1) The development and strengthening of Energy infrastructures and community

access to Energy is performed by the Government and/or Local Government.

(2) The development and strengthening of Energy infrastructures and community

access to Energy as mentioned in paragraph (1) is conducted by way of:

a. improving the capability of domestic industries in procuring Energy

Infrastructures;

b. developing supporting infrastructures for coal industries covering

transportation, stockpiling, and blending to create efficient market that

able to continually supply domestic demands;

c. expediting supporting infrastructures for oil and gas productions,

refineries, Energy transportation and distribution, transmission system,

and Energy distribution;

d. expediting supporting infrastructures for New Energy and Renewable

Energy;

e. giving access to community for obtaining information about energy in a

transparent way and the ease to have Energy; and

f. making simple community access to obtain information about the

development and strengthening of Energy infrastructures.

(3) The development of energy infrastructure shall take into account the geography

of Indonesia, which that is mostly composed of marine waters, to strengthen the

infrastructure of the exploration, production, transportation, distribution, and

transmission in the archipelago.

Article 24

(1) The Government encourages and strengthens the development of Energy

Industry in order to accelerate the achievement of the Provision of Energy

Provision and Energy Utilization objectives, strengthen the national economy

and employment absorption.

(2) Strengthening the development of Energy Industry as intended in Paragraph (1)

covers the followings:

a. Improvement of the ability of Energy Industry and domestic Energy

service;

b. Improvement of the development of domestic production equipment

industry and users of Renewable Energy industry;

c. Improvement of domestic ability to support geothermal exploration

activity and electricity support industry;

d. Encourage the industry of system and component of solar power plant

and power plant utilizing the movement and difference of sea layer

temperature;

e. Improvement of domestic content level in national Energy industry;

f. Development of the industry of wind power plant component / equipment

through small and medium enterprises and/or national industry;

g. Granting greater opportunities to national companies in the management

 of oil, natural gas and coal; and

h. Development of domestic Energy Industry through the purchase of

factory license.

Paragraph 5

Research, Development and Application of the Energy Technology

Article 25

(1) The activities of research, development and application of Energy technology is

directed to support national Energy Industry.

(2) Fund for the activities of research development and application of Energy

technology as intended in Paragraph (1) is facilitated until its commercial stage

by:

a. Government and/or Local Government in accordance with their

authorities; and

b. Business Entities.

(3) The Government and/or Local Government encourage the creation of climate

for the utilization and alignment of the result of research, development and

application of national Energy technology.

(4) The Government and/or Local Government strengthen the field of research,

development and application of Energy, at least through the followings:

a. Preparation and upgrade the human resources ability in mastering and

applying the technology, and safety in the field of Energy; and/or

b. Improvement of the mastery of domestic Energy technology through

research, development and application of an efficient Energy technology.

 Paragraph 6

Institution and Funding

Article 26

(1) The Government and/or Local Government strengthen the institution to ensure

the achievement of goals and objective of the Energy Provision and Energy

Utilization.

(2) Institutional strengthening as intended in article (1) shall be performed at least

by:

a. Completing the institutional system and bureaucracy service of the

Government and Local Government, and improving the coordination

among institutions in the field of Energy in order to accelerate the

decision making, licensing process and development of Energy

infrastructure;

b. Improving cooperation and coordination among research institutions,

universities, industries, policy makers and community in order to

accelerate the mastery and Utilization of Energy;

c. Improving accountability of the institutions by adjusting the institutional

function and authority in the central and regional level;

d. Improving the human resources ability in the field of Energy at the

regional in the Management of Energy;

e. Strengthening the organizational capacity at the regency/city that will be

responsible for the planning, development, and Management of Energy

in rural areas; and/or

 f. Regionalization of the provision of electrical Energy in order to reduce

disparities in the provision of electrical Energy outside Java.

(3) The Government and/or the Local Government is responsible for handling and

overcoming the problems of Energy, in accordance with their respective

authorities

Article 27

(1) The Government and/or the Local Government in determining the Energy

Provision development objective shall take into account the objective of the

economic growth.

(2) To achieve the Energy Provision development objective as intended in

Paragraph (1), the Government and/or the Local Government provides funding

allocation for development and strengthening of adequate energy infrastructure.

(4) The Government and/or the Local Government encourage the strengthening of

funding to ensure the Energy supply, equalization of Energy infrastructure, and

equalization of public access to Energy, national Energy Industry development,

and achievement of the Energy Provision and Energy Utilization objectives.

(3) The Government encourages Business Entities and Banks to also fund the

development of Energy infrastructure and Utilization.

(4) Strengthening of the funding as intended in Paragraph (2) shall be performed at

least by:

a. Improving the role of national banking in the funding of national oil and

gas production activities, development of Renewable Energy activities

and Energy saving program;

b. Appling a premium for exploitation of fossil Energy for the development of

 Energy; and/or

c. Providing a specific budget allocation by the Government and/or Local

Government in order to accelerate the equalization of access to

electricity and Energy.

(5) Exploitation premium as intended in Paragraph (5) letter b shall be used for oil

and gas exploration activity and development of New Energy Sources and

Renewable Energy, development of human resources ability, research and

development and development of supporting infrastructure.

CHAPTER IV

SUPERVISION

Article 28

National Energy Council shall conduct supervision over the implementation of

national energy policy that is cross-sectoral.

CHAPTER V

OTHER PROVISION

Article 29

National energy policy may be re-reviewed in 5 (five) years at the earliest, if deemed

necessary.

Article 30

National energy policy forms the basis for the preparation of the National General
Plan for Energy and National General Plan for Electricity.

CHAPTER VI

CLOSING PROVISIONS

Article 31

By the time this Government Regulation comes into effect, all implementing

regulation of the Presidential Regulation Number 5 of 2006 regarding National

Energy Policy shall still applicable insofar as it does not contradictory with this

Government Regulation.

Article 32

By the time this Government Regulation comes into effect, the Presidential

Regulation Number 5 of 2006 regarding National Energy Policy is revoked and

declared inapplicable.

Article 33

This Government Regulation shall come into effect as of the date of its promulgation.

For public cognizance, to order the promulgation of this Government Regulation by

publishing it in the State Gazette of the Republic of Indonesia.

Enacted in Jakarta

on October 17, 2014

 PRESIDENT OF THE REPUBLIC OF INDONESIA

Signed

DR. H. SUSILO BAMBANG YUDHOYONO

Promulgated in Jakarta

on October 17, 2014

MINISTER OF LAW AND HUMAN RIGHTS OF THE REPUBLIC OF INDONESIA,

Signed

AMIR SYAMSUDIN

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 300

ELUCIDATION OF GOVERNMENT REGULATION OF THE REPUBLIC OF

 INDONESIA

NUMBER 79 YEAR 2014

REGARDING

NATIONAL ENERGY POLICY

I. GENERAL

Energy has an important and strategic role for the achievement of social, economic,

environmental and sustainable national development. Energy needs are expected to

continue to increase as a consequence of economic growth and population growth.

Therefore, Energy Management shall be implemented appropriately in order to meet

the energy supply assurance, both for now and in the future.

Energy Management, particularly in the Management of Energy Resources is not yet

carried out optimally to meet domestic energy needs. Most of Primary Energy is still

allocated for export in order to generate foreign exchange and revenue sources in

the State Budget. As a result, the domestic energy needs both as fuel and raw

materials for industries is still not optimally met as set out in Article 33 of the

Constitution of the Republic of Indonesia of 1945.

Besides, there are a number of problems faced by the Energy sector, namely:

1. Inefficient use of Energy;

2. Subsidy of Energy that missed the target;

3. Price of Energy that has not reached its economic price;

4. Low investment interest;

 5. High dependence to fossil Energy that its not balanced with the increase of the

reserve provision;

6. Limited Energy infrastructure;

7. Development of Energy infrastructure that has not been supported by a strong

and independent national industry;

8. Limited funding;

9. Weak bias toward domestic technology products;

10. Energy research development that has not been well integrated;

11. Low mastery of Energy technology;

12. Lack of prioritization of energy development;

13. Low peoples access to Energy;

14. Energy management that has not yet fully applied the principles of

sustainable;

15. Non-optimal added value for Energy Management

With regard to the current conditions of Energy and a number of problems faced in

the energy sector, the Government needs to perform a proper Energy Management,

both on the supply side management as well as on demand side management in

order to realize the Energy Independence and National Energy Security. Therefore, it

is necessary to develop a national energy policy that includes the availability of

Energy for national needs, priorities for the development of Energy, national Energy

Resource utilization and the national Energy Buffer Reserve. The policy for Energy

Provision and development priorities of Energy and National Energy Buffer Reserve

is directed to ensure the security of national energy supply through the use of Energy

Resources proportionately, both non-fossil energy resources such as geothermal,

biomass, energy flow and waterfall, solar energy, wind power, nuclear power,

movement and sea surface temperature differences, and Fossil Energy Resources

such as petroleum, coal, natural gas, coal bed methane. Meanwhile, the policy on

the utilization of Energy Resources is directed at the use of Energy optimally and

efficiently in all sectors of the users.

The current Energy Management Paradigm put Energy Resources as commodity

exports to generate foreign exchange. These conditions resulted in the domestic

energy supply that cannot be properly secured, non-optimal increase of the added

value, and the loss of the opportunity to create new jobs, and become one of the

sources of economic growth inhibitors. Therefore, paradigm for the Energy

Management policy needs to be changed by putting energy as the capital of national

development.

With the above change in paradigm, it is expected to increase revenues from the

Energy sector, which can be partly used to encourage the development of Energy

sector, among others, through the search and the increase of fossil energy reserves,

the development of the New Energy and Renewable Energy, restoration of

Environmental function, and the Energy Resources Conservation.

II. ARTICLE BY ARTICLE

Article 1

Self-explanatory
 Article 2

Self-explanatory

Article 3

Self-explanatory

Article 4

Self-explanatory

Article 5

Self-explanatory

Article 6

Self-explanatory

Article 7

Self-explanatory

Article 8

Target or objective for provision and utilization of Primary Energy and Final Energy is

obtained by projecting national energy needs up to the year 2050, [which is] obtained

by projecting the energy needs within a certain time by period taking into account the

influencing parameters and assumptions used. In making projections of the energy

needs up to the year 2050, the main parameter used is economic growth and

population growth.
Projection of Energy demand is also taking into account the potential savings in

future Energy use, either in the demand side and in the Energy supply side as a

result of the advances of efficiency technology in the form of Energy machinery or

equipment as well as the growing awareness of the community for saving energy.

Energy needs up to the year 2050 is compiled by projecting that Indonesia will be a

new economic powers (emerging economies) in the year 2025 and became the new

developed countries in 2050.

Article 9

Letter a

Self-explanatory

Letter b

Self-explanatory

Letter c

Self-explanatory

Letter d

Self-explanatory

Letter e

Self-explanatory

Letter f

Number 1

The objective or target for mix of New Energy and Renewable Energy is

broken down into the kind of New Energy and Renewable Energy, in the
 National General Plan on Energy.

Number 2

Self-explanatory

Number 3

Self-explanatory

Number 4

Self-explanatory

Article 10

Paragraph (1)

Letter a

Self-explanatory

Letter b

Self-explanatory

Letter c

Self-explanatory

Letter d

Reduction of exports of fossil Energy gradually, particularly natural gas

and coal, is intended to prioritize the use of fossil Energy, especially gas

and coal, to meet domestic needs of raw materials or fuels that will

make fossil Energy, especially gas and coal, as the driver of the

economy that will provide economic value-added and multiplier effect to

the creation of employment opportunities, supporting industrial growth

in the upstream and downstream, community empowerment, providing

increase in States revenues from taxes and non-tax revenues, which in

 turn will boost economic growth and social welfare.

Letter e

Self-explanatory

Letter f

Self-explanatory

Paragraph (2)

Self-explanatory

Article 11

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

This provision contains a view that given the utilization of nuclear Energy

requires the high standard of safety of work and security, and considering the

impact of nuclear radiation hazards to the Environment, therefore its use

shall be considered as a last option. However, in case where in-depth studies

have been conducted on the presence of technology for development of

Nuclear energy for peaceful purposes, fulfillment of the growing energy

needs, provision of National energy on a large scale, reducing carbon

emissions, as well as the national interest urgency, then nuclear energy

basically can be utilized.

 Article 12

Self-explanatory

Article 13

Self-explanatory

Article 14

Self-explanatory

Article 15

Self-explanatory

Article 16

Paragraph (1)

Included as Energy supply industries are industries that runs a business of

management, transportation, storage and trade.

Paragraph (2)

Self-explanatory

Article 17

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)
 Self-explanatory

Paragraph (4)

Self-explanatory

Paragraph (5)

Self-explanatory

Paragraph (6)

Self-explanatory

Paragraph (7)

Letter a

Self-explanatory

Letter b

What is meant by "energy management" is an integrated activity to

control Energy consumption in order to achieve effective and efficient

Energy Utilization to produce maximum output through structured and

economical technical measures in order to minimize Energy Utilization,

including Energy for production process and minimize consumption of

raw materials and supporting materials.

Letter c

What is meant by "efficient" in this provision is the maximum value

resulting from comparison between the output and the input of Energy

in equipment utilizing Energy.

Letter d

What is meant by "saving" in this provision relates to the behavior of the

use of energy effectively and efficiently.

Letter e
 Self-explanatory

Letter f

Self-explanatory

Letter g

Self-explanatory

Letter h

Self-explanatory

Article 18

Self-explanatory

Article 19

Self-explanatory

Article 20

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Self-explanatory

Paragraph (4)

Letter a

Self-explanatory

Letter b
 Self-explanatory

Letter c

What is meant by "feed-in tariff" in this provision is a policy mechanism

for Renewable Energy sales price that is designed to accelerate the

investment of Renewable Energy technology.

Renewable. Letter d

Self-explanatory

Paragraph (5)

Self-explanatory

Article 21

Paragraph (1)

Self-explanatory

Paragraph (2)

Self-explanatory

Paragraph (3)

Self-explanatory

Paragraph (4)

Reduction of fuel subsidies and electricity gradually aligned with development

of New Energy and Renewable Energy in order to encourage the development

of the New Energy and Renewable Energy by ensuring the prices of New

Energy and Renewable Energy are competitive with Fossil energy prices.

Article 22

Self-explanatory
 Article 23

Self-explanatory

Article 24

Self-explanatory

Article 25

Self-explanatory

Article 26

Self-explanatory

Article 27

Self-explanatory

Article 28

Self-explanatory

Article 29

Self-explanatory

Article 30

Self-explanatory
 Article 31

Self-explanatory

Article 32

Self-explanatory

Article 33

Self-explanatory

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA

NUMBER 5609