Indonesia’s Energy Security Policies for theProsperity of the People

Ida NurlindaFaculty of Law Universitas Padjadjaran

ida.nurlinda@yahoo.co.id

Abstract

As stated in the Constitution Article 33 verse (3),1945, Indonesia’s energy management policy isfundamentally for the prosperity of the people. The aimcan only be achieved if the state has excellent energysecurity management where there is certainty of theavailability of the energy, people’s access to theenergy in reasonable price in a long period time whilemaintaining environmental protection. However, thiscondition is impractical in Indonesia due to severalfactors, particularly political will and institutionalissues. The policies are generally based on economicaspect by focusing the energy as the main capital fordevelopment and resource for foreign exchange. Theissues in energy management in Indonesia range from theabsence of efforts to fulfill the domestic energy andindustrial material needs with accessibility andcheaper price. There are also problems on the inter-government institutional coordination, including goodgovernance and good environmental governance in energymanagement.

This working paper was made by using legal normativeapproach, which means that the data are collectedthrough literary research, as well as legal materials.The purpose of this research is to propose alternativeproblem solution for the energy security policies whichsole aim is to meet the needs of the people. The dataare analyzed with qualitative legal approach employinglegal interpretation and legal construction.

As a tool to realize the prosperity of the people,it is required that issues such as availability,

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accessibility to the resources and environmentalprotection should be handled. To guarantee theavailability of the energy, it is suggested that thefulfillment of domestic general and industrial needsshould be prioritized, rather than focusing on foreignexchange. These problems should also be overcome by theinstitutions responsible for the matters in harmony andsynchronization in good governance. Besides theavailability, it is also important to guarantee theaccessibility for the people in economic principle. Theprice of energy is determined with reasonable economicvalue by considering the costs for production,environmental protection, conservation, and profit.Subsidy system can be an alternative to grant access tothose who cannot afford it. Therefore, the policyshould be based on the democratic, fairness andsustainablity principles of supply, exploitation, andproduction. These principles are crucial because energysecurity will lead to energy sovereignty by improvingthe ability to settle policies, supervise theimplementation, and securing the availability of theenergy for the prosperity of the people.

Keywords: Energy Security, Energy Sovereinty,

Prosperity of the People

A. Introduction

Energy security is defined as a condition in which

there is a guarantee for the availability of the

energy resources along with the accessibility for the

people in affordable price in a long period of time

while regarding the aspect of environmental

conservation. Referring to the definition, the

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indicators for energy security may include the

following notions1:

1. The availability of the energy resources shown in

the stability of the supplies;

2. The affordability for the people correlating to

the national income per capita; and

3. The accessibility to the energy products for the

users to fulfil their daily needs.

According to the data issued by the Ministry of

Energy and Mineral Resources in 2009, Indonesia’s oil

resource potential has been decreased to 9.1 billion

barrels. However, there is a significant potential for

the non-oil and gas resources. Coal energy, for

instance, has the potential of 90.5 billion tons.

Also, being country with the biggest geothermal

resources in the world, Indonesia secures 219.00

million SBM2. Even though Indonesia has the secured

amount and potential of energy resources, the country

is still facing the energy crisis, particularly for

electrical energy. Article 6 verse (1) Act No. 30 year

2007 on Energy states that energy crisis is defined as

a condition of lack of energy. For instance, North

Sumatera province has been familiar with the regular

electricity blackouts for a very long time. It is an1 Purba, Sampe L., Ketahanan Energi, Kemandirian Energi atau Kedaulatan Energi?(Energy Security Independence or Sovereignty), www.migasReview.comdownloaded on February 26, 20142 Partowidagdo, Widjajono, Migas dan Energi di Indonesia: Permasalahan danAnalisis Kebijakan (Oil and Gas and Energy in Indonesia: Problems and Analysis onPolicies), Development Studies Foundation, Bandung, 2009: pg. 237

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irony as the province is well known with its huge

potential of various energy resources including, oil,

gas, and coal, as well as waterfalls as power plants.

Therefore, energy availability alone is proven

inadequate to realize national energy security.

Meanwhile, the Constitution has clearly stated that

the sole purpose of energy security is to have control

over national resources for the sake of the wealth of

the people.

Further analyses have found that there is a variety

of problems regarding national energy security. They

include troubles from market-oriented energy

governance which aims seem to prioritize the energy

potential as the main source of national income

without considering its domestic needs. Growing

economic globalization has caused the government to

hand over energy management to financiers from

successful industrial countries. Their policies are

mostly based on neo-colonial strategy which encourages

reduced role of the state in developing countries in

protecting and managing energy needs of the people3.

The inception of Act No. 22 year 2001 on Oil and Gas

has led to the hand-over of state’s responsibility in

oil and gas management to the market mechanism which

3 Nurlinda, Ida, Prinsip-prinsip Pembaruan Agraria: Perspektif Hukum (ThePrinciples of Agrarian Reform: A Legal Perspective), RajaGrafindo Persada,Jakarta, 2009: pg. 238

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affects the absence of state’s control over the energy

in order to realize the wealth of the people.

To solve the mentioned problems, it is necessary to

analyze the best formula and direction for Indonesia’s

energy policies to achieve its national energy

security.

B. Method

Legal normative approach is employed as the method

for this study which means that the data are collected

through literary research, as well as legal materials,

including primary, secondary, and tertiary materials,

as the primary sources. The purpose of this research

is to propose alternative problem solution for the

energy security policies which sole aim is to meet the

needs of the people. The data are analyzed with

qualitative legal approach employing legal

interpretation and legal construction.

C. Results and Analysis

1. National Energy Policies

As stated in Article 1, point 25 Act No. 30, 2007 on

Energy, national energy policy is defined as energy

management based on the principles of equality,

continuity, and environmental insight in order to

achieve national energy security. Therefore, based on

the definition, it is crucial for the state to direct

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its national energy policies to the attempts on

realizing the energy availability and independence.

The availability of energy resources should be

prioritized to fulfil the domestic needs in the sense

of the access to the affordable energy for the people.

The Act No. 30 year 2007 on Energy has clearly

mentioned that it is important to establish an

institution in charge of formulazing national energy

policies, and therefore National Energy Council was

founded. The Council’s responsibilities are stated in

the Article 12 verse (2) Act No. 30 year 2007 on

Energy junto Article 3 Presidential Decree No. 26 year

2008 on the Establishment of National Energy Council

and Selection Procedure for Potential Members of

National Energy Council, which include the following:

1. To design and formulate national energy policies

to be concluded by the government on the approval

of Parliament;

2. To settle the national energy general plan;

3. To determine solutions for energy crisis and

emergency; and

4. To supervise the practice of energy policies in

inter-sectoral basis.

Since 1981, national energy policies have been

concluded with the major notions including

intensification, diversification, conservation, and

indexation, except in 1987 and 1991 when the policies

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did not include indexation as the main focus, as well

as in 2003 before the inception of Energy Regulations4;

meanwhile, in 1998, the similar focus was practiced

with addition in energy price and environment.

Diversification is defined as the policy to create

variety of energy exploitation by not only focusing on

the development of oil and gas the non-renewable

energy resources, but also advancing the use of new

and renewable energy resources based on potential

data. Intensification includes policy on explorational

operations for energy resources to identify reserved

potentials and the distribution in order to formulate

the existing energy exploitation arrangement. Last,

conservation focuses on the policy aiming at

developing the efficiency of national energy

exploitation, while non-renewable energy resources,

such as oil and gas, are limited to reserve for long-

term necessities5.

In reality, however, from 2003 to 2013, energy

policies focusing on diversification, intensification,

and conservation as the main notions have proven

significantly unsatisfactory. As previously explained,

energy crisis and energy emergency are still issues in

Indonesia. This is believed as the results of

obscurity in legal politics of energy management as

4 Patmosukismo, Suyitno Migas: Politik, Hukum dan Industri (Oil and Gas: Politics,Law, and Industry), Fikahati Aneska, Jakarta, 2011: pg. 3075 Ibid.: pg. 304-305

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the foundation of national energy policies. In the

establishment of crude oil refineries to strengthen

energy security, for instance, the Ministry of Finance

in the end of March 2014 had refused the proposal for

incentive for the establishment by PT Pertamina (as

state-owned enterprises in oil and gas) in

cooperation with Kuwait Petroleum Corporation (Kupec).

The investor is in need for incentive as the margin of

refinery is very thin, while the fund for the

investment is huge. In addition, the government has

also canceled the plan for refinery establishment

funded by state budget, whilst such crude oil

refineries are urgently needed to reduce national oil

import dependency and to strengthen the energy

security itself. For economical purpose, it also can

help decreasing national oil and gas trade balance

deficit which, according to data issued by the

Ministry of Energy and Mineral Resources, reaches

608,000 barrels per day (bpd) until the early 2014.

The condition shows that the consideration of

expensive investment for the development of energy

industry has caused delay in not only the development

itself, but also the establishment of supporting

infrastructures. Energy management and exploitation

are still carried out in conventional ways which

paradigm is to optimize the use of energy resources,

without considering environmental and sustainable

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availibility aspect. This has led to the

uncontrollable exploitation of non-renewable energy

resources. It is suggested that, though costly, the

investment for the establishment of energy industrial

infrastructures should be realized for the sake of

energy independence and sovereignty.

National Energy Council has taken the responsibility

for national energy policies, and the policies for the

period of 2014 until 2050 have also been arranged and

approved by the Parliament on January 28, 2014 while

waiting for the President’s approval to be assigned as

Presidential Decree. The arrangement includes a number

of major notions on energy availability for national

needs, energy development priorities, national energy

resources exploitation, and national energy supporting

reserve. Particularly for energy security, the

government has altered its energy policy paradigm from

Supply Side Policy (SSP) to Demand Side Policy (DSP).

SSP regulates the guarantee for supplies in the form

of exploration, production, and conservation

(optimalization paradigm), while DSP encourages social

consciousness on diversification and conservation

(efficiency paradigm)6.

National energy policies should be directed to the

attempts on energy independence, energy sovereignty,

and energy security. Strong energy independence and

6 The Department of Energy and Mineral Resources Press Release No.24/Humas DESDM/2008 on April 7, 2008 on Building National Energy Security

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energy security are necessary to realize economic

security leading to the wealth and prosperity of the

people. Developing energy independence requires not

only energy safety, but also energy security for

energy sovereignty not in apparent sense meaning that

ideally, the state should have control over energy

resources, but in reality, the control is owned by

private companies or even multi national corporations.

Generally, energy safety is defined the same as

energy security, though both may differ in the

essence. Energy safety refers to the availability of

energy resources for a certain period of consumption

time (both in long or short period); meanwhile, energy

security covers the ways of securing energy resources

for a certain period of time in stability while making

sure that they are still affordable for the people.

Therefore the latter possesses the elements of

availability, affordability, and accessibility. It is

never an easy task to realize both energy safety and

energy security as they require huge investments,

sophisticated modern technology, reliable human

resources, and business savvy. Those elements must be

supported by decisive and focused political

commitment, as well as legal policies and regulations

to secure the safety for investment activities and

positive impacts for the people.

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To support energy safety and energy security, it is

necessary to focus the energy management strategies on

energy sovereignty as it may secure independence and

the flexibility of the policies. It does not

necessarily mean reclusion to foreign capital because

even big industrial countries are always open to

foreign investments for the development of their own

energy industries. Being open to foreign capital is

not the same as handing over the sovereignty; it is

important for the government to apply positive

affirmation to national industries by encouraging the

ability to compete with foreign investors7. Energy

sovereignty must be supported by energy governance

with the Indonesian’s Constitution (UUD1945) Article

33 verse (3) in particular. In other words, state’s

control over energy resources for the wealth of the

people should be strongly based on transparent,

accountable, and responsible energy governance.

Referring to conclusions issued by the

Constitutional Court on judicial reviews for Oil and

Gas, Water Resources , Electricity , Coasts and Small

Islands, and Forestry acts, there is an extensive

definition of state’s control rights over natural and

7 Purba, Sampe L., “Ketahanan Energi, Kemandirian Energi atauKedaulatan Energi?” (“Energy Security: Energy Independence orEnergy Sovereignty?), an article onhttp://migasreview.com#sthash.39RJi4C5.dpuf February 19, 2014,downloaded on March 26, 2014

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energy resources covering five state’s authoritarian

functions:

a. Policy making function (beleid);

b. Regulating function (regelendaad);

c. Arranging function (berstuursdaad);

d. Governing function (beheersdaad); and,

e. Supervising function.

Supervisory is a new function as result from

judicial review of those regulation. Those functions

are integrated instruments to achieve the wealth of

the people by strengthening energy sovereignty. They

may also secure national energy security and energy

safety.

2. Energy Security Policies

To build a strong energy security system, the

management policies should be directed to secure the

energy availability, particularly for domestic

purposes. This has to be carried out through clear and

precise policies and regulations in the entire energy

system, not just the supply components, for example.

It have to include the social, environmental and

political aspects of a system’s security8. Also,

Christopher Cooper points out the similar notion on

how such policy should be implemented. Energy security

policy should be constructed from a better

8 Brown, M.A. and M. Dworkin, The Environmental Dimensions of EnergySecurity, in B. Sovacool (ed.), The Routledge Handbook of Energy Security,CAN Military Advisory Board, New York, 2007: page. 27

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understanding of the complex interactions between

security and the envorment, between socio-economic

inequality and voltage stability, and between primary

national fuel and internal politics9. Therefore, there

are many issues and aspectes related to the energy

security system. These aspects should be insured to be

well practiced.

Referring to several events related to this issue in

Indonesia, energy security may not be built based on

liberal regulations in which the state discharges

responsibility in natural resources management to the

private sectors (particularly foreign investors) and

market power as applied in the oil and gas management

based on Act No. 22 year 2001 on Oil and Gas Mining.

The government should play the role as welfarestate

actively taking control over actions directed for the

wealth of the people10. The active role is personified

through state’s alignment to the attempts to realize

wealth of the people, both through actions implemented

by state enterprises or national private corporations.

Neo-liberal economic system argues that the management

of energy exploitation may be handled through free

market competition and by applying the principle of

equality for level playing fields; this is considered9 Cooper, Christopher, Physics Envy: Why Energy Policy is more Art than Science,Journal of World Energy Law and Business, volume 6 Number 1 March2013, Oxford University Press, www.jwelb.oxfordjournals.org : page8210 Wahjono, Padmo, Indonesia ialah Negara Berdasarkan atas Hukum (Indonesia is aLegal-based Country), Ghalia Indonesia, Jakarta, 1986: pg. 102

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to be against the principle of economic democracy as

amended in the Constitution (UUD1945). State should

take control over energy exploitation based on three

notions that (1) energy is an essential need for the

people, (2) energy is an important element for the

state, and (3) energy is the main source to realize

wealth of the people11.

Clear and precise policies and regulations in energy

should also be supported by policies and regulations

on the establishment of energy infrastructures, for

instance crude oil refineries. It is crucial for the

government to consider energy resources processing

policy maximizing local elements, regulations

advancing performance and coordination among

institutions in energy management in order to

implement good governance, as well as other policies

aiming at wealth of the people. Abusive energy

management regulations and policies which sole purpose

is to increase national income are not in accordance

with the purpose of national development mainly aiming

at the wealth of the people. The New Order regime has

proved that such energy management enlarges gap

between strong and weak economy, as well as promotes

environmental damage.

3. Fair Paradigm in Energy Management

11 Manan, Bagir, “Energi dan Pasal 33 UUD 1945” (“Energy andArticle 33 in the Constitution”), an article on Padjadjaran LawReview, volume 1, Bandung, 2013: pg. 11

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Indonesia’s energy security should be built on the

basis of legal politics of energy management in fair

and sustainable paradigm. Fairness is fundamentally

the main purpose of law; moreover, according to Theo

Huijbers, it is not considered law if it does not

bring justice. Law must be bundled with justice, so it

would live up to its name12. Order and peace are only

parts of the purpose of legal implementation13. The

principle of justice accoding to John Bordley Rawls is

fairness14. Amartya Sen expresses the similar notion on

legal character as John Rawls saying that fairness can

broadly be seen a demand for impartiality. Rawls’s

specification of the demands of imparciality is based

on his constructive idea of the original position,

which is central to his theory of justice as

fairness15.

Rawls’s definition of original/genuine position is a

purely hypothetical situation characterized so as to

lead to a certain conception of justice16. In the

context of fair energy management, all Indonesian12 Huijbers, Theo, Filsafat Hukum (The Philosophy of Law), Kanisius,Yogyakarta, 1995: pg. 7713Sumardjono, Maria S.W., “Memaknai Kembali Hak Menguasai Negara atas SumberDaya Alam Pasca Putusan Mahkamah Konstitusi dan Tindak lanjutnya”(“Redefining State’s Authority over Natural Resources Post-Conclusion of Constitution Court and the Follow-up”), InagurationLecture, Indonesian Academy of Sciences, Yogyakarta, 2013: pg. 3114 Rawls, John, A Theory of Justice, Harvard University Press,

Massachusetts, 1999: page 315 Sen, Amartya, The Idea of Justice, The Belknap Press of HarvardUniversity Press, Cambride, Massachusetts, 2009: page 5416 Rawls, John, Op.cit.: page 11

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people are in the original position meaning that all

natural and energy resources legally belong to

Indonesian people. Basic Agrarian Law (BAL) Act No. 5

year 1960 recognizes such right as nation rights over

natural resources. Afterward, this nation rights

delegated to the state to led the prosperity for all

Indonesian people .

In relation to the original position, Rawls proposes

two principles of justice17:

a. Each person is to have an equal right to the most

extensive scheme of equal basic liberties

compatible with a similar scheme of liberties for

others;

b. Social and economic inequalities are to be

arranged so that they are both (a) reasonably

expected to be to everyone’s advantage and (b)

attached to positions and offices open to all.

The first principle is the basic principle of

freedom attatched to every individual. This principle

must propose an alternative and solution for injustice

to the unfortunates. The second one is related to the

individual’s social and economic rights in which the

distribution of income and wealth to a person must be

consistent with the principles of freedom and equality

for an opportunity. Therefore, both principles of

17 Rawls, John, op. cit.: page 53

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justice are related and complement to each other.

Social and economic rights should be guaranteed along

with political rights.

Referring to Rawls’s opinion above, Indonesian

people’s political rights (as amended in the

Constitution Article 28) should be guaranteed

initially, then the social and economic rights over

national energy resources. People are atteached to the

rights to have fair access to use and benefit from

energy resources, as well as gain the energy in

affordable price. The access and price should also be

in stable condition (not under fluctuation). In this

sense, the role of the state in energy management and

control over energy resources is crucially needed in

favor to the people. This includes the longing

problems such as the availability of energy supply and

the distribution system, so that the issue of energy

crisis and emergency in several regions in Indonesia.

In addition, the price of the energy should be

determined based on economic values. This means that

all the costs cover energy production cost, including

environment and conservation, as well as profit

analyzed based on people’s buying power, and are

defined by the government.

Furthermore, the definition of fairness should cover

for both current and future generations. Central and

regional governments should still subsidize those with

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better buying power, and such policy must be directed

to the right group so that it will not be a burden for

the governments. Article 33 verse (3) in the

Constitution states that the land, water, and all

natural resources (including energy) are controlled

and managed by the state for the people showing that

the government has such authority to determine the use

of the resources. For energy, particularly, Article

44 Act No. 30 year 2007 on Energy clearly states that

fossil energy resources, geothermal, large-scaled

hydro, and nuclear energy resources, as well as new

and renewable energy resources, are also in the

control of the state.

4. Sustainable Paradigm in Energy Management

Meanwhile, energy management legal politics with

sustainable paradigm means that national energy

management policies should consider the principles of

sustainable development. Our Common Future report issued

by World Commission on Environment and Development

(WCED) defines sustainable development as development

that meets the needs of the present without

compromising the ability of the future generations to

meet their own needs18. Principle 2 the Rio Declaration

1992, for instance, states that the countries in the

UN Charter and the principles of international law are

18 Ginther, Konrad and Paul de Walt, Sustainable Development and GoodGovernance, Martinus Nijhoff Publishers, Dordrecht/Boston/London,1995: pg. 10

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attached to sovereignty to use their natural resources

in accordance with policies in environment and

development. This is compliant with Indonesia’s energy

sovereignty which is built on the principle of state’s

control over natural resources. The regulations and

policies should be directed to the concept of green

energy focusing on the development of renewable energy

and conservation to realize a supply system and

sustainable energy exploitation in order to encourage

sustainable national development through optimum

renewable energy use, efficient technological

operation, as well as promoting energy saving way of

life19.

Sustainable energy supply and exploitation through

the concept of green energy is in accordance with

energy management policy paradigm which encourages

Demand Side Policy (DSP) promoting social awareness

for diversification and conservation of energy

resources. It is no longer the time to agree upon the

conservative notion arguing that natural resources are

a gift of nature to be enjoyed freely by all or that

the environment is a public good that cannot be traded

in markets has been proven faulty by at least three

developments. First, natural resources treated as free

goods or state property have soon be depleted. The19 Djajadiningrat, Surna Tjahja and Sutanto Hardjolukito, Demi Bumi,Demi Kita: Dari Pembangunan Berkelanjutan Menuju Ekonomi Hijau (For the Earth, ForMankind: From Sustainable Development to Green Economy), Media IndonesiaPublishing, Jakarta, 2013: pg. 274-275

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environment as a public good or “everybody’s property”

has turned out to be “nobody’s property”. Second, the

poor, on whose behalf recources and the environment

were ostensibly left outside the domain of the

markets, have been the ultimate victims. Third, many

innovative approaches, mechanisms and instruments for

bringing, natural resources and the environment into

the domain of the markets have been developed and

successfully tested in recent years20.

Such policy should be built upon the the ground of

the concept of sustainable development by integrating

economic, social, and environmental elements. Those

elements should be taken into consideration in the

processes of planning, policy application, and

development. Any economy-related activity should take

the social and environmental impacts into account.

Likewise, all other elements should be related to each

other21. With such paradigm, energy management is

directed not only to the wealth of the current

generation, but also of the next generation inheriting

the natural resources.

It is inevitable that the policy is the main

responsibility of the government; however, it would be

such a burden for the state to manage it without20 Panayotou, Theodore, Green Markets: The Economics of SustainableDevelopment, International Center for Economic Growth, HarvardInstitute for International Development, San Francisco, 1993:page. 14421 Salim, Emil, “Ratusan Bangsa Merusak Satu Bumi” (“Hundreds ofNations Damaging One Earth”), Kompas, Jakarta, 2010: pg. 84

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delegating tasks. Therefore, state-owned enterprises

are given the responsibility for some aspects of

management along with national private corporations

whose business is related to energy resources. Those

companies also must run their business with the fair

and sustainable paradigm, so that it will go along

with the economic principle of the state. Neglecting

this basic concept is considered a violation to human

rights, as the access and benefit from the energy

resources are the rights attached to every individual

under the Indonesian nationality. The United Nation

Human Rights Council on June 16, 2011 has signed the

Guiding Principles on Business and Human Rights, and

according to this Guiding principles, state have a

duty to protect individuals in their territory and/or

jurisdiction from human rights abuse by third parties,

including business enterprises22. This legal duty has

certain practical implications for business

enterprises operating in energy sector.

D. Gratitude

1. The Government of the Republic of Indonesia cq

Ministry of Education and Culture cq Directorate of

Higher Education;

22 Rae Lindsay, Robert Mc Corquodale, Lara Blecher, JonathanBonnitcha, Antony Crockett and Audley Sheppard: Human RightsResponsibilities in the Oil and Gas sector: Applying the UN Guiding Principles, Journalof World Energy Law and Business, volume 6 Number 1 March 2013,Oxford University Press, www.jwelb.oxfordjournals.org : page 8

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2. Universitas Padjadjaran

E. Conclusion

The expanding, borderless, and competitive global

economy condition has led to the extensive efforts by

countries in the world to apply sophisticated,

innovative, and creative science and technology

supported by huge amount of financial capitals.

However, these countries are not supported by colossal

natural resources as some developing countries, such

as Indonesia, which though have rich natural

resources, they are not governed with good energy

governance and fair and sustainable energy management

policies.

Natural and energy resources should be used for the

sake of the prosperity of the people; this can be

achieved by implementing good energy governance on the

foundation of energy security and energy sovereignty

leading to energy independence. To build energy

security, it is important to manage and exploit other

sources of energy other than oil and gas, given the

fact that these fossil energies have expended a huge

amount of the state budget to 300 trillion rupiahs

annually only for subsidy23. The policies should be

23 Rahmadi, Anton “Menuju Ketahanan Energi Indonesia di MasaDepan” (“Achieving Indonesia’s Energy Security in the Future”, apaper presented at “Dialog Visi Negara Kesejahteraan 2045, Tema:Energi dan Lingkungan Hidup”, Universitas Mulawarman-DPP Golkar,Samarinda, July 6, 2013: pg. 1

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directed to the exploration of new and renewable

sources of energy, such geothermal, biofuel,

biothanol, and such hidden under the land and water of

Indonesia waiting to be explored. Brazil, for

instance, has succeeded in developing biothanol as the

source of alternative energy since the country’s oil

crisis in 1973 by investing a vast amount of capitals

for ethanol production. This accomplishment has freed

the country from the uncertainty of world’s oil

market24. It is unavoidable, however, that enormous

financial supports are needed to alter domestic

subsidy budget for oil and gas.

Market-oriented base for the management and

exploitation energy resources should no longer be

favored even though it is the era of global economy.

This time does not necessarily mean that market power

and investors hold the authority to control the

resources without supervision from the government as

the representative of the people. Indonesia’s vital

position in global trading should be on the ground of

energy independence based on energy security and

sovereignty. Thus, fair and sustainable policies

should be arranged and implemented in the sense that

Indonesian people are still the priority for the

24 Agustiawan, Karen, “Indonesia dan Ketahanan Energi” (“Indonesiaand Energy Security”), a speech delivered at The Center forStrategic and International Studies (CSIS), Washington D.C, April10, 2013, www.pertamina.com , downloaded on February 22, 2014.

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access and benefit to the energy resources and the

supply should be in the safe amount for generations to

use. The government should then consider supporting

regulations and policies to achieve two main purposes

of the national development in relation to energy

management which are to build a sovereign nation and

to endure the prosperity of the people. The

implementation of the regulations and policies should

be supervised in every level of state institutions.

References

Anton Rahmadi. “Menuju Ketahanan Energi Indonesia di MasaDepan” “Achieving Indonesia’s Energy Secuirty in theFuture”), a paper presented at the “Dialog Visi NegaraKesejahteraan 2045, Tema: Energi dan LingkunganHidup”, Universitas Mulawarman-DPP Golkar, Samarinda,July 6, 2013.

Bagir Manan. “Energi dan Pasal 33 UUD 1945” (“Energy andArticle 33 in the Constitution), an article publishedby Padjadjaran Law Review, volume 1, Bandung, 2013.

Brown, M.A. and Dworkin, M., The Environmental Dimensions of EnergySecurity, in B. Sovacool (ed.), The Routledge Handbook ofEnergy Security, CAN Military Advisory Board, New York,2007.

Christopher Cooper, Physics Envy: Why Energy Policy is more Art thanScience, Journal of World Energy Law and Business,volume 6 Number 1 March 2013, Oxford University Press,www.jwelb.oxfordjournals.org

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