Management of Natural Resources and Energy Exports by Danantara Raises Concerns about Governance and Monopoly

Photo: Special

JAKARTA - President Prabowo Subianto's policy of forming an export agency for a number of strategic commodities under the Nusantara Anagata Power Investment Management Agency (Danantara) is considered to have the potential to extend Indonesia's dependence on coal as a source of energy and state income.

This step comes amid the government's commitment to accelerate the transition to clean energy.

The Executive Director of the Centre of Economic and Law Studies (Celios), Bhima Yudhistira, assessed that the establishment of PT Danantara Sumberdaya Indonesia was not only aimed at increasing state revenues amid pressure on the state budget, but also became a government strategy to control the supply chain of natural resources to meet domestic needs, especially coal and palm oil.

Bhima associated the policy with the plan to add 6.3 gigawatt coal-fired power plants (PLTU) in the RUPTL 2025-2034, plus 11 gigawatt PLTU captive for industrial areas.

According to him, the one-stop export system can make domestic coal supplies easier to obtain, thus hindering the acceleration of the transition to renewable energy.

"The export of coal with strict control of one door is a disincentive for entrepreneurs, so that the purchase of domestic coal supplies is at risk of rising. Indonesia is increasingly difficult to get out of the coal lock-in trap, because coal is perceived to be available in the domestic market. The reason for switching to renewable energy is increasingly hampered by cost," said Bhima in his statement, Thursday, May 21.

For the palm oil sector, Bhima highlighted the government's plan to increase the biodiesel blend to B50 starting July.

According to him, so far most of Indonesia's palm oil has been exported, so the existence of a single export manager is seen as an effort by the government to control the availability of crude palm oil (CPO) supply for domestic needs and the CPO needs for the B50 program are estimated to reach 18.6 million tons.

"In the end, if this program continues, Indonesia will continue to depend on oil, considering that B40 and B50 will also need fuel as a mixture. In fact, the energy crisis due to the conflict in the Strait of Hormuz has shown how vulnerable our energy resilience is if we still continue to depend on imported oil," he said.

In addition to the energy transition issue, Bhima added that the establishment of PT Danantara Sumberdaya Indonesia also raised concerns regarding governance and accountability.

He assessed that the centralized export scheme risked causing inefficiency and opening up opportunities for special treatment for certain business actors who have political closeness or access to the circle of power.

A similar view was expressed by the National Coordinator of Publish What You Pay Indonesia, Aryanto Nugroho, who assessed that centralization without transparency could actually increase the risk of governance, rather than solving existing problems.

"Experience shows that centralization without transparency actually increases the risk, not decreases it. This scheme risks moving the problem, not solving it, from one problem of unclear governance involving many private exporters to one large SOE," he said.

Aryanto emphasized that Article 33 of the 1945 Constitution should not be interpreted as justifying the monopoly of SOEs over strategic commodities.

According to him, the main principle that must be prioritized is accountability and public welfare in the management of natural resources.

He also reminded that Indonesia has had bad experiences related to the centralized management of commodities without adequate supervision, such as the BPPC case in the New Order era and various governance issues in other state trading institutions.

"Every time an economic scheme is centralized without an equivalent accountability architecture, the risk of corruption, rent-seeking, and political capture actually increases. The experience of the BPPC (Curing and Marketing Agency) of cloves in the New Order era, the chaos of Bulog, to a number of state trading enterprises that are trapped in scandals, shows a similar pattern that centralization without checks and balances is not a solution, but rather an escalation of risk," he explained.

Meanwhile, the Executive Director of Sustain, Tata Mustasya, assessed the success of the export agency depends heavily on the quality of Danantara's internal governance.

He emphasized that this institution should be able to improve the management of natural resources while taking into account the environmental and social impacts of extractive industries such as coal and palm oil.

"Internal governance is very important in achieving the goals of this body to improve natural resource governance and correct market failures by calculating negative externalities, in the form of environmental and social impacts, from the extractive sector, such as coal and palm oil into policy. If internal governance is problematic, this will actually cause government failures that have a greater impact than market failures," he said.

Tata also encouraged the government to immediately implement the coal export duty which has been delayed.

According to him, the implementation of this policy can be an additional source of funding for the development of renewable energy, including the ambition to develop 100 gigawatt of solar energy, while encouraging investment shifts towards the green economy sector.