This report profiles Indonesia’s utilities and energy industry, discussing market trends through 2014 and outlook for 2015 and beyond. The report also highlights leading players in the sector including PT Perusahaan Gas Negara Tbk, PT Medco Energi Internasional Tbk and PT Energi Mega Persada Tbk

The energy sector faced a tough period in FY15 due to lower prices. The utilities sector also experienced a significant deceleration. Meanwhile, government subsidies in the electricity sector have been reduced by raising the unit prices. Though the government has tried to lower subsidies, it is still a big drain on the country’s fiscal balance. The subsidies also make private sector participation in the electricity sector unviable.

While Indonesia is self-sufficient as far as gas supply is concerned, current electricity generation capacity, however, is insufficient to meet the demand. It is set to increase even more going forward. Based on the PLN Electricity Supply Business Plan 2011-2020, demand for electricity in Indonesia is projected to grow at the pace of 8.5% per year until 2020. To cater to the need of additional demand for electricity, the government has invited private companies to participate in the supply for public electricity through the independent power producer (IPP) programs.

Despite having about 6% of the total water resources in the world, water supply in Indonesia is characterized by low levels of access and poor quality. The Ministry of Public Works has set a challenging plan whereby more than two-thirds of the population will have access to clean water by 2015.

Key Points:

• Indonesia ranked sixth in terms of primary energy production and accounted for about 3% of the global energy production as of 2012.

• The country is highly dependent on the oil and gas sector for its primary energy consumption. Petroleum and natural gas together accounted for 53% of the country’s primary energy consumption requirement.

• Total domestic electricity production grew at a CAGR of 6.6% during 2004-14. Meanwhile, the domestic consumption of electricity grew at a higher CAGR of 7% during the same period.

• FY15 has proved to be a tough year for the economy with GDP slowing to a six-year low of 4.7% in 9MFY15. The electricity, gas and water supply sector also saw significant deceleration in growth in FY15.