Opening Remaks

1. OPENING REMARKS
OF THE MINISTER OF ENERGY AND MINERAL RESOURCES
DELIVERED AT
THE WORKSHOP ON FOSSIL FUEL SUBSIDY REFORM
Hotel Pullman Thamrin, Jakarta, 22-23 April 2015
- Distinguished member of the Commission VII of the House of
Representatives of the Republic of Indonesia, Bapak Satya Widhya
Yudha,
- Distinguished member of National Energy Council of the Republic of
Indonesia,
- Director General of Budget, Ministry of Finance or his representative
- Director General of Oil and Gas or his representative
- Director General of Electricity
- Director General of New and Renewable Energy and Energy
Conservation General of Electricity
- Prof. Dr. Maizar Rahman, Senior Researcheron Energy
- Distinguished Deputy DirectorGeneral for Electricity Information and
Analysis, Secretariat of Energy, Mexico Mrs. Lizeth Azucena Uribe
García.
- Dato’ Dr. Nadzri bin Yahya, Deputy Secretary General (Energy) and
Principal Assistant Secretary, Ministry of Energy, Green Technology
and Water, Malaysia
- Mr. Adan Enrique Garcia Ramos,Director of Price Policy for
Petroleum Industry, Secretariat of Finance, Mexico
- Program Manager of South East Asia, International Energy Agency,
Mr. Florian Kitt
- Mrs. Masami Kojima, Lead Energy Specialistof the World Bank
- Mr. Terrence G. Surles, Senior Advicerof California Institute for
Energy and Environment ;
- Mr. Peter Wooders,DirectorPrograme of Global Subsidies Initiative
- Distinguished Guests,
- Ladies and Gentlemen
Assalamu’alaikum Warahmatullahi Wabarakatuh,
May all of us be bestowed with peace and prosperity
Good morning to all of you
First and foremost I would like to thank you to all of you for joining us in
this Workshop on Fossil Fuel Subsidy Reform which is organized in

2. cooperation between the Secretariat General of the National Energy
Council, the Directorate General of Oil and Gas, Bandung Institute of
Technology (ITB) and the International Energy Agency.
As we all known, energy subsidies issue have been a long problem in
developing countries such as Indonesia. Currently, the Indonesian
government still subsidizes fuel oil (diesel, LPG and biofuels) and
electricity. The amount of the subsidy to be borne by the state budget in
2014 reached about 274 billion dollars, which was indeed, very
burdensome to the state budget and at the same time lowering the
government's ability to develop other sectors such as education, health
and physical infrastructure that can be benefitted directly by the people.
In order to reduce the burden of subsidies, especially fuel oil subsidies,
the Indonesian government has issued a policy to eliminate premium oil
subsidies, yet still provide a subsidy for diesel by Rp1,000 / liter. So far
the elimination of subsidies has been running well which is mainly
supported by the decline in world oil prices.
In an effort to improve national energy management, in October 2014,
the Government has issued Goverment Regulation No. 79 Year 2014 on
National Energy Policy which contains four main policy direction as
follows : (1) availability of energy (2) priority energy development (3)
utilization of national energy resources and (4) national energy reserves
and six supporting policies which consisted of :(1) Energy conservation,
energy resources conservation, and energy diversification;
(2) Environment and safety; (3) Pricing, subsidy, and energy incentives;
(4) Infrastructure and access of people to energy and energy industry;
(5) Research, development, and application of energy technology;
(6) Institutional and funding matters.

3. Those policy direction, established to achieve the energy mix target as
follows:
 In 2025, renewable share will be 23%, gas share 22%, coal share
30%, oil share 25%.
 In 2050, renewable share will be 31%, gas share 24%, coal share
25%, oil share 20%.
In particular subsidy policy described in article 21 which states that the
subsidy provided by the Government and Local Government in an effort
to implement a fair economic. In addition, the subsidy is given if the
purchasing power of the people can not be implemented and the price of
renewable energy is more expensive than the price of fossil fuels that
are not subsidized. Subsidies are also only given the right target for the
low income people. This article also explains that the reduction of fuel
and electricity subsidies done gradually until the purchasing power of the
people is achieved.
Distinguished Guests, Ladies and Gentlemen,
The electricity subsidy was phased-out through the application of the
increase in electricity basic tariff periodically, but the subsidy is given to
disadvantaged households groups. This Electricity subsidy reduction
policy relatively does not cause upheavals in society. It will be a learning
lesson for Mexico who has been successful in removing fuel subsidies
but still facing difficulty in reducing the electricity subsidy.
I hope that during the two days of discussions and based on the
experience of the two countries, Indonesia and Mexico may formulate

4. constructive recommendations to the governments of both countries in
the effort to achieve fair economical energy prices.
Distinguished Guests, Ladies and Gentlemen,
I am sure, this workshop will be of beneficial by the presence of some
countries in this workshop to share their experiences in implementing the
reduction of subsidies on energy prices to get the best achievements in
the field.
I wish you all fruitful deliberations and successful conference.
With these few words, I now wish to declare this ”Workshop on Fossil
Fuel Subsidy Reform” officially open.
Thank you for your kind attention and participation.
Wassalamualaikum Wr. Wb.
National Energi Council, The Republic of Indonesia
Syamsir Abduh
Coordinator
.