VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

Indonesia is committed to achieving net zero emissions in efforts to deal with climate change. Among others is by transitioning previously fossil-based energy production to renewable energy while building a green economy in a fair and affordable manner. Indonesian Minister of Finance Sri Mulyani Indrawati stated it on Side G20 event entitled “Sustainable Finance: Instruments and Management in Achieving Sustainable Development of Indonesia”, in Bali, Wednesday (13/07).

Minister Sri Mulyani said, the transition should be fair and affordable, and this is one of the most challenging tasks. She explained, the affordability principle stems from the challenge when determining how to reduce non-renewable energy, especially coal, replacing it with the use and development of renewable energy more. The Minister of Finance however, warned that this would have serious consequences on the financing side. She emphasized that the cessation of the use of coal is not free of cost. Expensive in fact, she said, because it will have an impact on the State-Owned Electricity Company-PLN in terms of the cost of electricity production. If the consequence is an increase in costs, the price of electricity will be more expensive.

For that, Minister Sri Mulyani said there are three things that need to be considered to test the affordability principle of this energy transition. First, by looking at people's purchasing power. Secondly, is the ability of PLN. the Minister of Finance said that if the community and industry are unable to pay the higher electricity price, then PLN will absorb the losses due to this.

She continued that PLN has the potential to transfer the loss to the Government. So, Sri Mulyani said that the third aspect of affordability is from the State Budget and Revenue side to provide subsidies.

Thus, if these three aspects are considered properly, according to the Minister of Finance, Indonesia will be able to tranfer the use of energy from non-renewable to renewable without damaging the people's economy, PLN's business and financial situation, as well as the Government's budget.