This Week's Headlines (10 - 16 Sep 2022)

16 Sep 2022

This Week's Headlines


  Pertamina in talks with Russia on oil imports

  State-owned oil-and-gas company Pertamina is in talks to buy crude oil from Russia while the
  Group of Seven (G7) forum is trying to get other countries to join its push for a price cap on
  Russian oil. 


  “Pertamina is in contact with Russia’s side, that’s all I can say,” Russian Ambassador to
  Indonesia Lyudmila Vorobyova told a news conference in Jakarta on Wednesday. “We are ready
  [to sell crude], and the conditions are negotiated between relevant agencies and companies.
  What will the result be? We’ll see.”  


  Indonesia is considering the purchase of crude oil from Russia, which currently sells the
  commodity below global market prices to several countries, as the government seeks to shield
  domestic consumers from high international energy costs. 


  The surge in oil prices this year is straining the state budget as the government has increased
  subsidy spending to keep domestic fuel prices low, while also striving to keep its fiscal
  consolidation plan on track.  


  Pertamina was quoted by media in April as saying that it was studying the estimated cost and
  amount of Russian crude to import.  


  When asked about progress in the talks with Moscow, Milla Susilo, senior communications
  manager of Pertamina’s refinery and petrochemical arm PT Kilang Pertamina Internasional,
  told The Jakarta Post on Wednesday: “We cannot disclose that information yet.” 


  Russian oil prices have risen in anticipation of a European Union embargo, with the benchmark
  oil grade Urals trading at an US$18 to $25 per-barrel discount to international crude benchmark
  Brent, down from a $30 to $40 discount earlier this year, Reuters reported on Saturday.  


  Urals oil is still flowing to European refiners under term deals concluded prior to February.
  Though, from early December, EU companies will no longer be able to buy Russian seaborne
  crude, while the G7 moves ahead with its plan to put a price cap on Russian oil. 


  ‘It’s up to you, we will not sell’  


  Ambassador Vorobyova said Russia would not sell any oil to countries imposing a price cap.  


  “[A price cap] is unrealistic, and I think the Russian side has stated, if you want a price cap,
  we will not sell [oil] to you. [If some countries] don’t want to buy our oil, okay. It’s up to [them],”
  she said at the same event on Wednesday.  


  Top officials from the G7 countries agreed last Friday on a price-capping mechanism for
  Russian oil exports in an attempt to limit how much money Russia can earn from each barrel
  it sells on the global market while keeping Russian oil flowing to global markets that depend on
  those supplies. 


  EU Commissioner for Energy Kadri Simson said the EU, as a member of the G7 forum, agreed
  to the scheme so that countries buying Russian oil products “would not pay them those extra


  “So, our message to Indonesia, India and China, who are still willing to buy Russian products, is
  to propose an oil-price cap [for Russian oil],” she told reporters in Jakarta on Tuesday.  


  However, Finance Minister Sri Mulyani Indrawati said on July 15 that such a move would not
  solve the world’s energy problems.  


  “Imposing a cap definitely is not going to solve the problem, because it is about the quantity [of
  crude oil in the market], which is not adequate when compared to demand,” she said in an
  interview hosted by CNBC during the Group of 20 (G20) Finance Ministers and Central Bank
  Governors (FMCBG) meeting in Bali.  


  The energy subsidy budget in Southeast Asia’s largest economy tripled in 2022 from the
  originally earmarked amount to Rp 502.4 trillion (US$33.74 billion) because of the rise in global
  oil prices and the depreciation of the rupiah against the US dollar.  


  At the same time, the consumption of subsidized fuel is far exceeding initial estimates. Pertalite
  gasoline use is now projected to amount to 29 million kiloliters this year, up 26 percent from the
  previous estimate of 23 million kl.  

  Energy and Mineral Resources Minister Arifin Tasrif said on Aug. 26 that the government planned
  to provide the extra 6 million kl to “continue providing subsidized fuel oil for the people”.  


  The energy minister did not rule out buying oil from Moscow, “if it’s available”. 


  “The principle is that, if [cheaper] oil is available, [the government] will buy it, but the source is
  yet to be determined,” Arifin told reporters on Aug. 30. 


  Source: The Jakarta Post 



  Indonesia to review minimum wage rules after protests
 over fuel price hike


  Indonesia will review minimum wage and other labor rules, the president's office said on
  Tuesday, after trade unions staged nation-wide protests against a recent hike in petrol prices
  that they say has come even as incomes stagnate. 


  President Joko Widodo raised subsidized fuel prices in Southeast Asia's largest economy by
  30% earlier this month to rein in a spiraling energy subsidy budget, sparking protests by
  workers and students across the country. 


  The fuel price hike is set to accelerate inflation, which has already reached its highest since
  2015 due to rising food prices. 


  Heru Budi Hartono, chief of the president's office, on Monday met with workers protesting at
  the presidential palace in central Jakarta to discuss their demands, according to a palace


  Workers have called for a change in the formula used by the government to determine annual
  increases in minimum wage, and for changes in the controversial Job Creation law, Heru said
  in the statement, referring to controversial legislation passed in 2020 that unions said was
  too pro-business. 


  Authorities are set to review the workers' demands on Tuesday, Heru said. 


  With growth and inflation in 2021 still reeling from the pandemic, minimum wage rose by an
  average of only 1.09% in 2022 across the nation of 270 million people, media reported. 


  Hermanto Ahmad, secretary general of labour union KSPSI, was quoted in the palace
  statement as saying the fuel price hike will have a knock-on effect on prices of other


  The KSPSI did not respond to Reuters' request for comment. 


  Another labour group that has been organising rallies, the KSPI, will continue protesting until
  the government reverses the fuel price hike, its chairman Said Iqbal told Reuters on Tuesday. 


  Source: Reuters 




  Presidential Decree on Coal Phase-out Comes Together
 with EV Mandate


  President Joko “Jokowi” Widodo has issued a decree on the Acceleration of Renewable Energy
  Development that provides guidelines to gradually stop the use of coal in power plants. 


  The presidential decree, which was signed on Tuesday, instructed state-run electricity company
  PLN to accelerate the expiry date for coal-burning power plants the company owns or leases
  from other providers. 


  “Coal-burning power plants should no longer exist by 2050,” according to the decree. 


  The construction of a new coal-fired power plant is prohibited unless it’s based on contracts
  signed before the decree was issued. 


  The decree aims to “reduce greenhouse emissions by 30 percent” within a decade. 


  In the decree, Jokowi instructed related ministers to formulate a “roadmap” for renewables and
  the coal phase-out. 


  The president also issued a separate instruction that obliges high-ranking central and regional
  government officials to use battery electric vehicles (BEV) in their operational duties and
  appointed Chief Investment Minister Luhut Binsar Pandjaitan to lead the transition. 


  The instruction applies to all cabinet members, state agency heads, the National Police chief,
  the Indonesian Military chief, the attorney general, the cabinet secretary, the presidential
  chief of staff, governors, and mayors. 


  The BEVs can be procured “through purchases, leases, or the conversion of fossil fuel vehicles
  into battery electric vehicles” using state funding, according to the presidential instruction. 


  The BEV mandate for state officials came a month after the Transportation Ministry issued a
  decree legalizing the conversion of cars with internal combustion engines into BEVs at
  government-approved automobile repair shops. 


  But so far the government has not authorized a single repair shop capable of BEV conversion. 


  State-Owned Enterprises Minister Erick Thohir said on Wednesday he has instructed electricity
  company PLN to build more charging stations. 


  “I also asked [state-run oil company] Pertamina to provide charging services at their fuel
  stations,” Erick said. 


  Source: Jakarta Globe