Stakeholders and regulations: strengthening Indonesia’s gas industry

Westana H Wiraatmadja's picture
Westana H Wiraatmadja, President Director and Chief Executive Officer, Energi Nusantara Merah Putih, PT
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PT. Energi Nusantara Merah Putih with its subsidiaries, Pasifik Agra Energi and Power Merah Putih, is developing a LNG receiving and regasification terminal and an associated combined cycle power plant, which will supply electricity to smelters in Bantaeng Industrial Park, South Sulawesi.

Speaking at the upcoming Gas Indonesia Summit and Exhibition as well as being a founding shareholder and driving force behind the development of the project, Gastech Insights spoke with Westana H Wiraatmadja. In this interview, Mr Wiraatmadja shares his knowledge on Indonesia’s gas industry and how key stakeholders and regulations can help with the market developments.

Gastech Insights: What should key stakeholders do to strengthen Indonesia’s gas industry?

Westana H Wiraatmadja: To strengthen the gas industry in Indonesia, all the key stakeholders have to be integrated and work in parallel. We had a good experience in 2007 when we converted kerosene to LPG, with the Government solidly supporting and accelerating the kerosene to LPG conversion program. At that time, ESDM, BPH Migas, Pertamina and Ministry of Finance are all working together.

However, this time, we are facing a bigger challenge. We have to involve more stakeholders including: Ministry of Finance, ESDM, SKK Migas, BPH Migas, Ministry of State Owned Enterprises, Pertamina, PGN, PLN, Ministry of Industry, Ministry of Trade, Ministry of Transportation, Ministry of Public Works and Housing and many more.

PLN is the biggest gas user and will be the most bankable off taker. However, all of the developments in the energy business should not just concentrate on PLN. The Industrial, Housing, and Marine sectors should have the same attention and priority, as well as other unique industries such as smelters and steel mills, petrochemical and refineries.

In my personal opinion, the next step should be to get the Ministry of Industry, the Ministry of Trade, the Ministry of Energy and Mineral Resources, Ministry of State Owned Enterprises and Ministry of Finance on board. Some of the big industrial estates, specifically with unique or difficult power profiles, should not be part of PLN’s responsibility. Let the unique power demand be supplied by “unique” power plants which are specifically designed and engineered for this purpose. This can significantly reduce the stress on the main transmission and distribution line.

To achieve the planned economic growth, we have to build the infrastructure, and energy is one of the very first basic elements. Building power plants as well as distributing LNG to smaller scale projects are the next most important things. As we know, the liquid fired power plant is not the best solution, and the distribution also creates some efficiency problems.

Gastech Insights: New emissions regulations indicate rise of LNG as marine fuel, do you agree?

Westana H Wiraatmadja: I fully agree with the new emission regulations in the marine fuel sector. The technology has been proven for years, the fuel efficiency is higher and the engine performance is better; so the challenge will be how to distribute the LNG efficiently.

The government and the big companies (LNG Producers) should build the distribution facility as part of a less commercially-driven infrastructure. In the long-term investment, the government will benefit on the saving of less MFO/ HSD import and the big companies will eventually benefit from the LNG and gas trading Indonesia is strategically located, within the marine lines and we have to take advantage of this new emission regulation.

Gastech Insights: How can the industry reduce costs and drive innovation in Indonesia?

Westana H Wiraatmadja: The big issue is uncertainty. When most of the things are certain in the development, the risk is much lower and manageable.

The bureaucracy has improved quite substantially, with the licenses and permits being simpler to achieve with strong support from BKPM (Investment Coordinating Board) this time. The number of permits and licenses are also much less.

Gastech Insights: What are you most looking forward to at the upcoming Gas Indonesia Summit next week?

Westana H Wiraatmadja: I am looking forward to seeing the clearer path in development of LNG distribution projects.

Share your insights and join the conversation: How do you think the Indonesian gas industry can reduce costs and drive innovation? Leave your comments below.

On the 13th July Mr Wiraatmadja is discussing “Aligning Key Stakeholders to Support Gas Sector Growth” at the 2ndGas Indonesia Summit and Exhibition at Jakarta Convention Center. To discover more about the full conference programme and to register as a delegate, click here.

Image courtesy of PT. Energi Nusantara Merah Putih