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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 …

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. This paper was presented for The President Republic of Indonesia as an academic background for Presidential Decree on Ratification of MOU on ASEAN Power Grid

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  • 1. 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. Ir. Noezran Azwar, MT 1 April 2008
  • 2. 1 April 2008 INDONESIA & ASEAN POWER GRID Indonesia Roles in ASEAN Power Grid E nergy sector including electricity, in recent With this background, the power utilities and years becomes a factor of economic growth in all authorities of ASEAN countries established a joint countries, which also in ASEAN countries. forum Heads of ASEAN Power Utilities/Authorities Electricity is being massively produced from available (HAPUA) in 1981. One of this forum tasks is to energy resources to meet the demand. Nevertheless, establish and develop electricity interconnection the development of new transmission and distribution network between ASEAN countries. In 2003 HAPUA of the electric power is also being accelerated. conducted a study “ASEAN Interconnection Master plan Study” (AIMS). The main goal is to found better But, unfortunately not all countries have the luxury to ASEAN electricity power interconnection master plan produce and distribute electricity easily, especially the that suits the need for supply, distribution and countries that geographically have large areas and transmission, security, and opportunities for electricity separated into islands and the countries which trading between ASEAN countries. The study result is demographically not distributed very well. These a proposal for electric power interconnections that countries are experiencing high cost investment to should be established between years 2007 – 2020; provide electricity to their people. In some cases, the closest energy or electricity resources being located in Table 1 AIMS Proposal for ASEAN Interconnection neighbor countries that open the possibilities for having No Grid Interconnections Year of electricity trading between countries. 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 2009 b) Udon - Nabong 2010 c) Mae Moh - Hong Sa 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 Picture 1 ASEAN Countries through ASEAN policies for strengthening and widening mutual cooperation on interconnection and In South East Asia region, the electricity trading electricity trading. occurred in 1966 between Lao PDR with Thailand. This same cooperation also conducted in 1978 between Thailand, Malaysia, and Singapore. 1
  • 3. 1 April 2008 GENERAL SITUATION AND ELECTRIC POWER CONDITION ON INDONESIA INTERCONNECTION BETWEEN ELECTRICITY SECTOR ASEAN COUNTRIES Indonesia energy elasticity to economic growth is still The discretion and opportunities given by GOI have not more than 1. It is showing that, Indonesia still has high yet being used optimally by the private sector whether dependency to energy consumption for growing the for technical reason or financing problem. This kind economy. In parallel with energy and electricity situation occurred in some areas in Indonesia. efficiency effort for reducing energy dependency, to have more sustained economic development, Indonesia Like in Kalimantan Barat province, electric power still has to do extra effort on providing energy and supply still depends on old diesel generators (PLTD), electricity. which the operation cost is getting higher since the inclining of world’s oil crude prices. The electrification Indonesia is one of energy resources rich countries, ratio in year 2007 is only 53.7%. from the fossil fuel (oil, gas, and coal) to renewable energy (hydro, wind, solar, biomass, and nuclear Kalimantan Barat electricity peak load in 2007 is 235 power). But with Indonesia geographic condition as an MW with production capacity of 1.197,5 GWh. Sixty archipelago country, and demographically not percent of the load is mainly supplied by electric power distributed very well, the efforts to provide energy and generators from Kapuas Connection System through electricity by utilizing those energy resources or 150 kV transmission line and the balance from other distributing the electricity, in some cases, are facing a off-grid generators. Electricity selling in 2007 is 1,038.7 lot of obstacles. This condition is driving high cost GWh with composition of; household 632.2 GWh, investment on electricity production and distribution commercial buildings 207.6 GWh, industries 94.5 GWh, and becomes the reason why Indonesia still has low and other public services 104.4 GWh. electrification ratio, which less than 60%. Electricity demand factors in Kalimantan Barat are In the effort to raise electrification ratio and to population growth and economic growth. Population accelerate electricity capacity development, growth projection until 2025 is 0.89 per year with the Government of Indonesia (GOI) provide discretion for economic growth projection is 7.4%. With these development electric power supply sector through numbers, the electrification ratio in 2025 is projected policies and regulation. For example, through Law no. up to 99%. Electricity demand growth until 2025 is 15 Year 1985 About Electricity and Law no. 30 Year projected to be 4.3% per year with the peak load to be 2007 About Energy, Presidential Decree no. 5 Year 402 MW. Backup system is assumed 40% – 45%. The 2006 About National Policy on Energy, Ministerial electric powers plants have already integrated to the Decree no. 1 Year 2006 About Procedures on Electric system are off-grid diesel generators (in total of 12 MW) Power Purchasing and/or Grid Leasing in the Effort of and mini hydro generator (PLTM Merasap 1.5 MW). Electricity Provision for Public, GOI gives discretion to There is plan to build 335 MW electric power plants to private sector to have electric power plant meet year 2025 electricity demand of 402 MW which is (Independent Power Producers – IPP) which sell the consist of coal generators (PLTU, 235 MW), diesel electricity produced to National Electric Power generators (PLTD, 45 MW) and gas generators (PLTG, Company (PLN) whom will distribute it to the people. 55 MW). The ongoing power plant projects are coal generators; PLTU Kura-Kura (2 x 25 MW) and PLTU Through those policies and regulation, and through Parit Baru 2 (2 x 50 MW) which will be on operation in Ministerial Decree no.2 Year 2006 About the 2009. Development on Medium Scale Renewable Energy Power Plant, GOI also give the discretion and In our neighbor ground, Sarawak Malaysia, there is opportunities for renewable energy power plant large hydro power plant which has already on development. 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 2
  • 4. 1 April 2008 utilized to meet Kalimantan Barat electricity demand. All the interconnection plans have to be based and refer If ASEAN Power Grid could be implemented as AIMS to Law no.30 Year 2007 About Energy, which give GOI 2003 results, then grid interconnection between discretions to establish international cooperation on Kalimantan and Sarawak will be engaged in 2012. 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; Picture 2 Kalimantan Barat Transmission and Distribution The studies shall subject to the harmonization Master Plan of technical specifications for the ASEAN Power Grid If ASEAN electricity interconnection cooperation 2. Financing; format to be business to business scheme, then the The studies shall subject to available modes or tariff on Malaysia – Kalimantan Barat to be set on each arrangements for the financing of the business interest between PLN (the buyer) and Bakun construction, operation and maintenance of the Hydro Power (the seller). If the tariff is referring to ASEAN Power Grid. Malaysia basic price which is 0.085 $/kwh and in the 3. Taxation and tariff other side PLN’s cost of generating electricity in The studies shall subject to arrangements for Kalimantan Barat is 0.26 $/kwh1, and with a simple the mutually agreed imposition of, or exemption from, import, export or transit fee, duty, tax or calculation the PLN’s cost efficiency would be 0.175 other government imposed fees and charges on $/kwh. Therefore with this interconnection, there is the construction, operation, and maintenance of benefit for PLN in the form of investment/ operating the ASEAN Power Grid. cost reduction. 4. Regulatory and Legal Frameworks The studies shall subject to harmonization of Beside above interconnection plan, there are other regulatory and legal frameworks within ASEAN interconnections based on AIMS which are: Malaysia – to hasten the implementation of bilateral or Sumatera (2012) and Batam – Singapore (2015). cross border power interconnection and trade. In Malaysia – Sumatera interconnection plan there will 5. Electric Power Trade be electricity exchange in each country peak load time. The studies shall subject to Institutional and Indonesia will sell the electric power excess to Malaysia contractual arrangements for power trade. in Malaysia peak load time (10.00 – 14.00) and will buy 6. Third Party Access electric power from Malaysia in Indonesia peak load The studies shall subject to arrangement for time (17.00 – 22.00). third party access for power interconnection and trade in accordance with such internationally In Batam – Singapore interconnection plan Indonesia accepted standards in the electricity supply would be the electric power producer and will sell the industry and formulation of a transmission electric power produced to Singapore. pricing framework within ASEAN. 1 Quote from Pontianak Post in 3
  • 5. 1 April 2008 MOU on APG delegates the responsibilities to Heads of would reduce deficit of electricity supply in ASEAN Power Utilities/Authorities (HAPUA) to peak load time. establish SEAN Power Grid Consultative Committee 3. Increasing of national income. The electricity (APGCC). trading between Indonesia – Singapore will give economic benefit. To engage the enforcement of MOU on APG, there has 4. Affect the energy security, since there will be to be a ratification of MOU on APG by each country2. dependency of electric supply to Malaysia in Ratification instrument of MOU on APG in Indonesia certain amount and time. shall be based on law and other regulation. The references for establishing the ratification instrument On those natures, therefore, the suitable ratification are: instrument format definition is by Law through legitimating by the Parliament. 1. The Constitution 1945 2. Law no. 30 Year 2007 About Energy On the other side, MOU on APG still does not have the 3. Law no. 15 Year 1985 About Electricity mother law or treaty on the ASEAN level, yet. MOU on 4. Law no. 24 Year 2000 About International APG is not a technical implementation of any ASEAN Treaty mother laws. Therefore there shall be establishment of 5. Law no. 10 Year 2004 About Establishment of the mother law first in order to enforce MOU on APG. Laws Based on above Laws, ratification instrument format CONCLUSION definition shall be observed and determined by the The signing of MOU on APG is a right step in the effort natures of the international cooperation will be of providing electricity for people also in increasing conducted. The ratification instrument shall be agreed national income. The APG should be treated as mutual and legitimated by the Parliament if there are: cooperation between ASEAN countries. To enforce MOU on APG in order to implement the APG in time, a) Impact on the nation there is ratification instrument shall be established b) Impact on national budget soon. c) Impact on conjunct laws and regulations;3 Ratification instrument on international treaty shall be legalized in the format of Law if related to: References a) Politics, peace, defense and security of the nation. 1. ASEAN, Memorandum of Understanding b) National border; on ASEAN Power Grid, 2007 c) Nation sovereignty; 2. Republik Indonesia, UUD 1945 d) Human rights and environment; 3. Republik Indonesia, UU No. 30 Tahun 2007 e) Establishment of new Laws; Tentang Energi f) International grant and loan4 4. Republik Indonesia, UU No. 15 Tahun 1985 Tentang Kelistrikan The natures of ASEAN electric power grid 5. Republik Indonesia, UU No. 24 Tahun 2000 interconnection through MOU on APG for Indonesia Tentang Perjanjian Internasional are: 6. Republik Indonesia, UU No. 10 Tahun 2004 1. International electricity trading. Tentang Pembentukan Perudang- 2. Securing energy and electricity supply. undangan Malaysia – Sumatera interconnection plan 7. Republik Indonesia, Peraturan Presiden No.5 Tahun 2006 Tentang Kebijakan 2 Article X of Memorandum of Understanding on Energi Nasional ASEAN Power Grid 8. Republik Indonesia, Peraturan Menteri 3 Article 11 UUD 1945 Energi dan Sumber Daya Mineral No. 1 4 Article 10 UU No. 24 Tahun 2000 Tentang Perjanjian Tahun 2006 Tentang Prosedur Pembelian Internasional 4
  • 6. 1 April 2008 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 5