Restructuring of energy sector a must to anticipate trade liberalization challenges: Purnomo

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Tuesday that the government was committed to accelerate the restructuring process of the domestic energy sector to anticipate the challenges of trade liberalization.

In a written speech delivered at the opening of an oil and gas exhibition and conference, Purnomo said that state-owned companies including oil and gas firm Pertamina, electricity firm PLN, and gas distributing firm PGN had dominated the domestic energy sector for decades, and due to the lack of competition, it was evident there had been substantial inefficiencies.

?The introduction of competition would help to eradicate these inefficiencies, and with lower costs will prepare Indonesia to meet competition from its neighbors when regional trade pacts such as AFTA become effective over the next few years,? he said.

AFTA would start in 2003.

The government has drafted several bills relating to the energy sector in a bid to facilitate the restructuring process.

A new oil and gas bill is currently being debated in the parliament.

Purnomo said that the proposed new law would introduce the open market mechanism to the downstream oil industry and would enable private companies to participate in oil refinery operations, transportation and distribution, as well as retail activity.

?Given the existing and projected high growth rates for oil demand in Indonesia, and the huge demand for oil that already exists in this highly populated country, we expect there to be keen interest in these new investment opportunities from the private sector,? he said.

Purnomo also said that new legislation for the restructuring of the power sector was about to be submitted to the parliament.

He explained that Indonesia currently had a clear competitive advantage in being a significant energy supplier to the Asian region, exporting substantial quantities of crude oil and refined oil products, LNG, and coal.

Purnomo said that Indonesia has the second largest proven and potential gas reserves in Asia, some 160 tcf (trillion cubic feet). There also significant coal reserves, proven and potential coal reserves totaling some 16.9 billion tons, and proven and potential oil reserves of 9.6 billion tons.

?Indonesia is committed to retaining this competitive advantage and remaining a key energy supplier to the Asian region,? Purnomo said.(Godang)