This Is Sri Mulyani's Explanation Of The Energy Transition And Its Implications For The State Budget

Minister of Finance Sri Mulyani (Photo: screenshot of the Ministry of Finance Youtube)

JAKARTA - The Minister of Finance (Menkeu) Sri Mulyani said that efforts to encourage the use of clean energy had its own consequences for the management of state finances.

According to him, the energy transition ideals that the government is now intensifying can certainly have implications for the state budget.

For example, the Minister of Finance said that the government's discourse to early retire a number of steam power plants (PLTU) is still on track.

“Efforts to carry out early retirement for PLTU will definitely have an impact on the provision of funds. For that we have to calculate because many of the power plants have long-term contracts with PLN. So, in order to honor the contract and at the same time carry out early retirement from the steam power plant, compensation from the government is definitely needed and this is an important thing,” he said when he was a speaker at the G20 Sustainable Finance for Climate Transition discussion agenda, Thursday, July 14.

The Minister of Finance added that this compensation is not expected to disturb the financial stability of the state.

The reason is that compensation for PLTU is estimated to suck up a large budget.

"Remember, in the last two years our deficit has increased (due to the pandemic) and must be restored (a deficit below 3 percent) next year," he said.

Therefore, continued Sri Mulyani, the government is very careful in formulating regulations so as not to disturb the balance of the state budget while at the same time maintaining the momentum for economic recovery to continue.

"This is where it is important to design policies that can provide incentives for entrepreneurs to be able to carry out a green economy," he stressed.

"It should be noted that PLN as a state electricity provider company must be able to provide affordable prices for the community, business actors, and also be safe from the cost of government energy subsidies. One other thing is that we must also ensure that PLN's cash flow can be maintained," continued Minister of Finance Sri Mulyani.

For information, the current national electricity production is still dominated by PLTU with a contribution of more than 60 percent.

Meanwhile, based on the Ministry of Finance report, it was stated that the value of electricity subsidies had penetrated Rp. 21.3 trillion until the first semester of 2022.

This amount is equivalent to 35.7 percent of the ceiling of Presidential Decree No. 98 of 2022 which uses the ICP benchmark of 100 US dollars.

As of May 2022, the volume of subsidized electricity consumption will reach 25.6 TWh, reaching 38.5 million customers.