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Indonesia
>> Regional Overview >> Indonesia Overview Program Data Sheet
497-013
USAID MISSION: Indonesia
PROGRAM TITLE: Energy Sector Reform (Pillar: Economic Growth, Agriculture, and Trade)
STRATEGIC OBJECTIVE AND NUMBER: Energy Sector Governance Strengthened, 497-013
STATUS: Continuing
PLANNED FY 2002 OBLIGATION AND FUNDING SOURCE: $3,630,000 DA
PROPOSED FY 2003 OBLIGATION AND FUNDING SOURCE: $4,130,000 DA
INITIAL OBLIGATION: FY 2000 ESTIMATED COMPLETION DATE: FY 2004Summary: The energy sector is a major component of the Indonesian economy, generating nearly 30% of total Government revenues and significant foreign exchange. However, the sector is plagued by weak policies, corruption, inefficient production and distribution, wasteful consumption, and massive energy subsidies that siphon off half of the sector's $10 billion in annual revenues. USAID's program to strengthen efficiency, governance, and transparency in the energy sector will help Indonesia overcome these challenges and derive the greatest benefits from its energy resources. USAID technical assistance and training activities include-
- energy policy, analysis, and restructuring;
- development of oil and gas and electricity laws to increase efficiency and private sector investment;
- increasing public awareness and involvement in energy issues; and
- energy efficiency and renewable energy development.
Inputs, Outputs, and Activities: FY 2002 Program: A reformed energy sector can contribute billions of dollars in tax revenue, have a positive environmental impact, rationalize pricing, increase access to energy services, and sustain Indonesia's energy resource base. USAID is the primary bilateral donor working on energy sector reform. USAID will assist the Government of Indonesia (GOI) to implement the new oil and gas law (drafted with USAID assistance), draft a new electricity sector law, and continue electricity sector restructuring to increase efficiency and private sector investment. Technical assistance and training activities will facilitate the Government's efforts to reduce energy subsidies, both in the longer-term and for the planned 30% reduction in 2002. USAID will focus on mitigating the negative social impact of price increases through outreach activities that increase the public's understanding of the reasons behind the price increases. Other technical assistance will provide analysis on the nexus between energy, environment, and economy (pricing/subsidy, supply/demand, and regional energy policy) for key Government policymakers at the local and national level. USAID will expand activities that foster grassroots support for energy reform and promote renewable energy development.
Planned FY 2003 Program: USAID plans to use FY 2003 resources to continue technical assistance and training activities that encourage energy sector reform. USAID intends to continue to focus on implementation of electricity reform, including passage of a new law, and expects to begin activities on implementation of a new oil and gas sector law. USAID plans to continue to provide technical assistance on subsidy reductions, on raising public awareness about energy sector reform and promoting cleaner energy production and use.
Performance and Results: USAID technical assistance on drafting led to the enactment of a new oil and gas law in October 2001 that increases competition and efficiency by ending the monopoly of the State Oil and Gas Company (Pertamina). Implementation of the law will upgrade product quality for consumers, increase government revenues, and improve air quality. USAID is encouraging the Government of Indonesia (GOI) to enact a second new law governing electricity to increase efficiency, introduce independent regulation, and open the power market to competition.
In 2001, the Government took major steps toward the reduction of energy subsidies, increasing electricity prices by 17.5% and petroleum products by 29%. USAID provided technical assistance for activities by local NGOs to begin building public support for subsidy elimination. These local NGOs conducted public hearings on energy subsidies, helped the Government by developing a strategy to address the adverse impact of price increases, and expressed their views in testimony before the Parliament. The Center for Energy Information, established through a USAID activity in the Ministry of Energy and Mineral Resources, produced policy analysis on pricing and subsidy removal that led to a new law eliminating all petroleum subsidies by 2004, except kerosene. Kerosene and electricity subsidies will be eliminated by 2005.
Indonesia's decentralization program has placed responsibility for energy resources in the hands of local governments. USAID is working with local universities to strengthen local capacity in energy policy-making and provide a forum for local governments to better analyze and understand local and national energy issues. In 2001, USAID trained more than 100 local government officials and regional university lecturers on calculating oil and gas and mineral resource revenue sharing, a contentious issue between central and local governments.
USAID technical assistance played a key role in Indonesia's decision to phase out leaded gasoline by 2003. Principal Contractors, Grantees, or Agencies: USAID activities are implemented by the Institute for International Education (prime), Advanced Engineering Associates International (prime), local NGOs (subs), and the Albany Research Center, and the U.S. Department of Energy (prime).
US Financing in Thousands of Dollars
497-013 Energy Sector Governance Strengthened DA Through September 30, 2000 Obligations 1,000 Expenditures 0 Unliquidated 1,000 Fiscal Year 2001 Obligations 4,130 Expenditures 187 Through September 30, 2001 Obligations 5,130 Expenditures 187 Unliquidated 4,943 Prior Year Unobligated Funds Obligations 0 Planned Fiscal Year 2002 NOA Obligations 3,630 Total Planned Fiscal Year 2002 Obligations 3,630 Proposed Fiscal Year 2003 NOA Obligations 4,130 Future Obligations 0 Est. Total Cost 12,890
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Last Updated on: May 29, 2002 |
