Press release - March 10, 2016
Jakarta, March 9 2016 - Falling international demand and plummeting coal prices are derailing Indonesia’s plans for expanding coal-fired power plants, as revealed this week by the Indonesian Coal Mining Association and PwC. The headlines focused on the possibility that the country’s coal reserves could be exhausted by 2033. But for Indonesians, there is a more immediate threat.
Despite years of profitable mining, with gross profits of $6.5 billion in 2011, the Indonesian Coal Mining Association (APBI-ICMA) is now calling for a huge public subsidy, including a raid on the country’s pension funds, in order to survive.
Its call for the government to pay a surcharge of 1% on the basic cost of Rp 1400/kWh amounts to a subsidy of about US $230 million a year (Rp. 3.0 trillion). The higher subsidy of 3% would cost the Indonesian taxpayer US $680 million a year (Rp. 8.9 trillion).
This subsidy would be payable for 25-30 years, amounting to about US $6-7 billion - to provide 15 GW of coal-fired electricity, which is well below Indonesia’s energy needs. It blows a huge hole in the coal association’s claim that coal is “relatively cheap” compared to other sources of electricity. The cost of producing solar electricity India, for example has fallen to $6.5c / kWh (Rp. 830/kWh as a result of ambitious government policies. That is less than 60% of the current cost of coal-generated electricity in Indonesia.
Arif Fiyanto, senior campaigner for Greenpeace Indonesia, said:
“Indonesian coal companies cannot be allowed to get away with this crazy plan. Not content with scarring the landscape and in many cases walking away from clean-up costs, the companies now expect ordinary Indonesians to bail them out of their financial mess.
“Indonesians will never accept their pension funds being raided to prop up an ailing coal industry in this way. Sources of finance are drying up as banks and other investors recognise that the coal industry is becoming a huge stranded asset. It’s clear the APBI-ICMA is unable to stand on its own feet, and has no future.
“Indonesia needs to turn its back on this fuel. The money the coal companies are demanding would be better invested in renewable energy which, in the long term, would provide cleaner, cheaper energy for Indonesia people.”
Greenpeace will be releasing a more detailed analysis of the APBI-ICMA’s proposals in the near future.
Media Contact :
Arif Fiyanto, Head of Climate and Energy Campaign Greenpeace Southeast Asia : 0811-180-5373
Rahma Shofiana, Media Campaigner, Greenpeace Indonesia, 0811-1461 674