The Government Continues To Strive For A Fair And Affordable Energy Transition

Illustration (Photo: Doc. Ministry of Energy and Mineral Resources)

JAKARTA - The government has stated that it will continue to strive for the transition of energy from fossil-based use to renewable energy in order to achieve green economic development through equitable and affordable ways.

This was conveyed by the Minister of Finance (Menkeu) Sri Mulyani when speaking at the G20 side event agenda entitled Sustainable Finance: Instruments and Management in Achieving Sustainable Development of Indonesia, quoted on Thursday, July 14.

According to the Minister of Finance, the principle of affordability stems from the challenge of determining how to reduce non-renewable energy, especially coal, by replacing it with the use and development of more renewable energy.

However, he said that this would have serious consequences on the financing side.

“Termination of the use of coal is not free. Expensive in fact, because it will have an impact on PLN in terms of electricity production costs. If the consequence is an increase in costs, then the price of electricity will be more expensive," he said.

For this reason, the Minister of Finance said there are three things that need to be considered to test the principle of affordability of this energy transition. First, by looking at people's purchasing power.

"This means that people and industry must consume electricity which is much more expensive, can they afford it? That is affordability," he explained.

Second, by looking at PLN's capabilities, there is a potential for the community and industry to be unable to pay higher electricity prices, so PLN will absorb the losses due to this.

The Minister of Finance continued that PLN has the potential to transfer the losses to the government. Thus, the state must be present to provide subsidies through the state budget.

Thus, with these three aspects, it will be able to transition the use of energy from non-renewable to renewable without damaging the people's economy, PLN's business and financial situation, as well as the government's budget.

"Because the question of affordability is who should pay, how much should we pay in an affordable way," closed the Minister of Finance Sri Mulyani.