Faisal Basri Predicts USD 8 Billion Energy Deficit in 2040

TEMPO.CO, Jakarta - Universitas Indonesia senior economist Faisal Basri predicted Indonesia would experience an energy deficit of up to US$80bn by 2040. The prediction is based to the inequality between domestic energy production and consumption.

"Production continues to fall, but consumption continues to rise. Our oil and gas has now a deficit of US$5.7bn," he said at the Finance Ministry building on Tuesday, December 10.

Faisal said Indonesia is actually quite as the state still has ample coal energy reserves worth US$20 billion, which, despite the oil and gas deficit, allows the country to have fossil energy reserves until 2020.

But by 2021, when coal reserves began to deplete, Indonesia will begin to experience energy deficit.

Domestic supply is unlikely to improve anytime soon as investors in the upstream oil and gas sector find it difficult to do business in Indonesia.

Faisal said that the 2018 Global Petroleum Survey ranked Indonesia among the ten countries with the largest investment constraints in the upstream oil and gas sector. Indonesia's rank is not far from Iraq and Libya, which are seen as having the biggest obstacle in upstream oil and gas investment.

The survey revealed that the international business world sees Indonesian regulations at the ministerial level often fail. There is also the perception that the contract system in Indonesia disappoints investors, and that biased and uncertain regulations pose high risks of losing money.

Faisal said the government should review the current policy. "The solution is not Omnibus Law. Obviously, this is a flip-flop governance policy. We were already at post recovery but then suddenly the scheme is changed to grow split," he said.

FRANCISCA CHRISTY ROSANA