Ir. Noezran Azwar, MT

1 April 2008

INDONESIA & ASEAN

POWER GRID

Indonesia Roles in ASEAN Power Grid

Memorandum of Understanding on ASEAN Power Grid being established

to strengthen and widen the mutual cooperation on electricity

interconnection and trading between ASEAN countries with the purpose of

region energy sector security and sustainability.

1 April 2008

1

INDONESIA & ASEAN POWER GRID

Indonesia Roles in ASEAN Power Grid

nergy sector including electricity, in recent

years becomes a factor of economic growth in all

countries, which also in ASEAN countries.

Electricity is being massively produced from available

energy resources to meet the demand. Nevertheless,

the development of new transmission and distribution

of the electric power is also being accelerated.

But, unfortunately not all countries have the luxury to

produce and distribute electricity easily, especially the

countries that geographically have large areas and

separated into islands and the countries which

demographically not distributed very well. These

countries are experiencing high cost investment to

provide electricity to their people. In some cases, the

closest energy or electricity resources being located in

neighbor countries that open the possibilities for having

electricity trading between countries.

Picture 1 ASEAN Countries

In South East Asia region, the electricity trading

occurred in 1966 between Lao PDR with Thailand. This

same cooperation also conducted in 1978 between

Thailand, Malaysia, and Singapore.

With this background, the power utilities and

authorities of ASEAN countries established a joint

forum Heads of ASEAN Power Utilities/Authorities

(HAPUA) in 1981. One of this forum tasks is to

establish and develop electricity interconnection

network between ASEAN countries. In 2003 HAPUA

conducted a study “ASEAN Interconnection Master

plan Study” (AIMS). The main goal is to found better

ASEAN electricity power interconnection master plan

that suits the need for supply, distribution and

transmission, security, and opportunities for electricity

trading between ASEAN countries. The study result is

a proposal for electric power interconnections that

should be established between years 2007 – 2020;

Table 1 AIMS Proposal for ASEAN Interconnection

No Grid Interconnections Year of Implementation

1 Sarawak - P. Malaysia 2015 2 P.Malaysia - Sumatra 2012 3 Batam - Singapore 2015 4 Sarawak - West Kalimantan 2012 5 Philippines - Sabah 2015 6 Sarawak - Sabah - Brunei 2015 7 Thailand – Lao PDR

a) Roi Et - Nam Theun 2 b) Udon - Nabong c) Mae Moh - Hong Sa

2009 2010 2013

8 Lao PDR - Vietnam 2010 9 Thailand-Myanmar 2014

10 Vietnam - Cambodia 2008 11 Lao PDR-Cambodia 2010 12 Thailand-Cambodia 2007

To follow-up AIMS, in 23 August 2007 in Singapore,

Memorandum of Understanding on The ASEAN Power

Grid (MOU on APG) signed by the ASEAN ministers.

MOU on APG is agreement between ASEAN countries

through ASEAN policies for strengthening and

widening mutual cooperation on interconnection and

electricity trading.

E

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GENERAL SITUATION AND

CONDITION ON INDONESIA

ELECTRICITY SECTOR Indonesia energy elasticity to economic growth is still

more than 1. It is showing that, Indonesia still has high

dependency to energy consumption for growing the

economy. In parallel with energy and electricity

efficiency effort for reducing energy dependency, to

have more sustained economic development, Indonesia

still has to do extra effort on providing energy and

electricity.

Indonesia is one of energy resources rich countries,

from the fossil fuel (oil, gas, and coal) to renewable

energy (hydro, wind, solar, biomass, and nuclear

power). But with Indonesia geographic condition as an

archipelago country, and demographically not

distributed very well, the efforts to provide energy and

electricity by utilizing those energy resources or

distributing the electricity, in some cases, are facing a

lot of obstacles. This condition is driving high cost

investment on electricity production and distribution

and becomes the reason why Indonesia still has low

electrification ratio, which less than 60%.

In the effort to raise electrification ratio and to

accelerate electricity capacity development,

Government of Indonesia (GOI) provide discretion for

development electric power supply sector through

policies and regulation. For example, through Law no.

15 Year 1985 About Electricity and Law no. 30 Year

2007 About Energy, Presidential Decree no. 5 Year

2006 About National Policy on Energy, Ministerial

Decree no. 1 Year 2006 About Procedures on Electric

Power Purchasing and/or Grid Leasing in the Effort of

Electricity Provision for Public, GOI gives discretion to

private sector to have electric power plant

(Independent Power Producers – IPP) which sell the

electricity produced to National Electric Power

Company (PLN) whom will distribute it to the people.

Through those policies and regulation, and through

Ministerial Decree no.2 Year 2006 About the

Development on Medium Scale Renewable Energy

Power Plant, GOI also give the discretion and

opportunities for renewable energy power plant

development.

ELECTRIC POWER

INTERCONNECTION BETWEEN

ASEAN COUNTRIES The discretion and opportunities given by GOI have not

yet being used optimally by the private sector whether

for technical reason or financing problem. This kind

situation occurred in some areas in Indonesia.

Like in Kalimantan Barat province, electric power

supply still depends on old diesel generators (PLTD),

which the operation cost is getting higher since the

inclining of world’s oil crude prices. The electrification

ratio in year 2007 is only 53.7%.

Kalimantan Barat electricity peak load in 2007 is 235

MW with production capacity of 1.197,5 GWh. Sixty

percent of the load is mainly supplied by electric power

generators from Kapuas Connection System through

150 kV transmission line and the balance from other

off-grid generators. Electricity selling in 2007 is 1,038.7

GWh with composition of; household 632.2 GWh,

commercial buildings 207.6 GWh, industries 94.5 GWh,

and other public services 104.4 GWh.

Electricity demand factors in Kalimantan Barat are

population growth and economic growth. Population

growth projection until 2025 is 0.89 per year with the

economic growth projection is 7.4%. With these

numbers, the electrification ratio in 2025 is projected

up to 99%. Electricity demand growth until 2025 is

projected to be 4.3% per year with the peak load to be

402 MW. Backup system is assumed 40% – 45%. The

electric powers plants have already integrated to the

system are off-grid diesel generators (in total of 12 MW)

and mini hydro generator (PLTM Merasap 1.5 MW).

There is plan to build 335 MW electric power plants to

meet year 2025 electricity demand of 402 MW which is

consist of coal generators (PLTU, 235 MW), diesel

generators (PLTD, 45 MW) and gas generators (PLTG,

55 MW). The ongoing power plant projects are coal

generators; PLTU Kura-Kura (2 x 25 MW) and PLTU

Parit Baru 2 (2 x 50 MW) which will be on operation in

2009.

In our neighbor ground, Sarawak Malaysia, there is

large hydro power plant which has already on

operation, Bakun hydro power plant 2400 MW.

Technically, this power plant is over production (since

the resource is over supply) and the electricity can be

1 April 2008

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utilized to meet Kalimantan Barat electricity demand.

If ASEAN Power Grid could be implemented as AIMS

2003 results, then grid interconnection between

Kalimantan and Sarawak will be engaged in 2012.

Picture 2 Kalimantan Barat Transmission and Distribution

Master Plan

If ASEAN electricity interconnection cooperation

format to be business to business scheme, then the

tariff on Malaysia – Kalimantan Barat to be set on each

business interest between PLN (the buyer) and Bakun

Hydro Power (the seller). If the tariff is referring to

Malaysia basic price which is 0.085 $/kwh and in the

other side PLN’s cost of generating electricity in

Kalimantan Barat is 0.26 $/kwh1, and with a simple

calculation the PLN’s cost efficiency would be 0.175

$/kwh. Therefore with this interconnection, there is

benefit for PLN in the form of investment/ operating

cost reduction.

Beside above interconnection plan, there are other

interconnections based on AIMS which are: Malaysia –

Sumatera (2012) and Batam – Singapore (2015).

In Malaysia – Sumatera interconnection plan there will

be electricity exchange in each country peak load time.

Indonesia will sell the electric power excess to Malaysia

in Malaysia peak load time (10.00 – 14.00) and will buy

electric power from Malaysia in Indonesia peak load

time (17.00 – 22.00).

In Batam – Singapore interconnection plan Indonesia

would be the electric power producer and will sell the

electric power produced to Singapore.

1 Quote from Pontianak Post in www.plnkalbar.co.id

All the interconnection plans have to be based and refer

to Law no.30 Year 2007 About Energy, which give GOI

discretions to establish international cooperation on

energy provision. That cooperation shall be based on

nation goals of:

a. Strong nation energy security;

b. Security of domestic energy supply

c. Increase the nation economic growth.

On above basis, the signature of MOU on APG has tobe

comply with above Law no.30 Year 2007.

THE ENFORCEMENT OF MOU ON

ASEAN POWER GRID Inside the MOU on APG there is agreement between

countries to do studies in solving of cross border issues

which are:

1. Technical;

The studies shall subject to the harmonization

of technical specifications for the ASEAN Power

Grid

2. Financing;

The studies shall subject to available modes or

arrangements for the financing of the

construction, operation and maintenance of the

ASEAN Power Grid.

3. Taxation and tariff

The studies shall subject to arrangements for

the mutually agreed imposition of, or exemption

from, import, export or transit fee, duty, tax or

other government imposed fees and charges on

the construction, operation, and maintenance of

the ASEAN Power Grid.

4. Regulatory and Legal Frameworks

The studies shall subject to harmonization of

regulatory and legal frameworks within ASEAN

to hasten the implementation of bilateral or

cross border power interconnection and trade.

5. Electric Power Trade

The studies shall subject to Institutional and

contractual arrangements for power trade.

6. Third Party Access

The studies shall subject to arrangement for

third party access for power interconnection and

trade in accordance with such internationally

accepted standards in the electricity supply

industry and formulation of a transmission

pricing framework within ASEAN.

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MOU on APG delegates the responsibilities to Heads of

ASEAN Power Utilities/Authorities (HAPUA) to

establish SEAN Power Grid Consultative Committee

(APGCC).

To engage the enforcement of MOU on APG, there has

to be a ratification of MOU on APG by each country2.

Ratification instrument of MOU on APG in Indonesia

shall be based on law and other regulation. The

references for establishing the ratification instrument

are:

1. The Constitution 1945

2. Law no. 30 Year 2007 About Energy

3. Law no. 15 Year 1985 About Electricity

4. Law no. 24 Year 2000 About International

Treaty

5. Law no. 10 Year 2004 About Establishment of

Laws

Based on above Laws, ratification instrument format

definition shall be observed and determined by the

natures of the international cooperation will be

conducted. The ratification instrument shall be agreed

and legitimated by the Parliament if there are:

a) Impact on the nation

b) Impact on national budget

c) Impact on conjunct laws and regulations;3

Ratification instrument on international treaty shall be

legalized in the format of Law if related to:

a) Politics, peace, defense and security of the nation.

b) National border;

c) Nation sovereignty;

d) Human rights and environment;

e) Establishment of new Laws;

f) International grant and loan4

The natures of ASEAN electric power grid

interconnection through MOU on APG for Indonesia

are:

1. International electricity trading.

2. Securing energy and electricity supply.

Malaysia – Sumatera interconnection plan

2 Article X of Memorandum of Understanding on

ASEAN Power Grid 3 Article 11 UUD 1945 4 Article 10 UU No. 24 Tahun 2000 Tentang Perjanjian

Internasional

would reduce deficit of electricity supply in

peak load time.

3. Increasing of national income. The electricity

trading between Indonesia – Singapore will

give economic benefit.

4. Affect the energy security, since there will be

dependency of electric supply to Malaysia in

certain amount and time.

On those natures, therefore, the suitable ratification

instrument format definition is by Law through

legitimating by the Parliament.

On the other side, MOU on APG still does not have the

mother law or treaty on the ASEAN level, yet. MOU on

APG is not a technical implementation of any ASEAN

mother laws. Therefore there shall be establishment of

the mother law first in order to enforce MOU on APG.

CONCLUSION The signing of MOU on APG is a right step in the effort

of providing electricity for people also in increasing

national income. The APG should be treated as mutual

cooperation between ASEAN countries. To enforce

MOU on APG in order to implement the APG in time,

there is ratification instrument shall be established

soon.

References

1. ASEAN, Memorandum of Understanding

on ASEAN Power Grid, 2007

2. Republik Indonesia, UUD 1945

3. Republik Indonesia, UU No. 30 Tahun 2007

Tentang Energi

4. Republik Indonesia, UU No. 15 Tahun 1985

Tentang Kelistrikan

5. Republik Indonesia, UU No. 24 Tahun 2000

Tentang Perjanjian Internasional

6. Republik Indonesia, UU No. 10 Tahun 2004

Tentang Pembentukan Perudang-

undangan

7. Republik Indonesia, Peraturan Presiden

No.5 Tahun 2006 Tentang Kebijakan

Energi Nasional

8. Republik Indonesia, Peraturan Menteri

Energi dan Sumber Daya Mineral No. 1

Tahun 2006 Tentang Prosedur Pembelian

1 April 2008

5

Tenaga Listrik dan/ atau Sewa Menyewa

Jaringan Dalam Usaha Penyediaan

Listrik Untuk Kepentingan Umum

9. Republik Indonesia Departemen Luar Negeri,

Petunjuk Pelaksana Pembuatan

Perjanjian Internasional , 2000

10. PT. Energy Management Indonesia, Laporan

Akhir Penyiapan Kerjasama Antar Negara

ASEAN dalam Interkoneksi Sistem Tenaga

Listrik, 2007

11. REPSF, Preparing for Electricity Trading

in ASEAN, 2005

12. PLN, Perubahan Rencana Usaha

Penyediaan Tenaga Listrik 2006 – 2015,

2006

13. PLN, Rencana Usaha Penyediaan Tenaga

Listrik 2006 – 2015, 2005

14. Pontianak Post, Mesin PLTD Terbakar, 14

Juni 2006