President Regulation No. 96 of 2024: Transforming Energy Crisis Management Through Energy Buffer Reserves
Authors
Presidential Regulation Number 96 of 2024 (“Reg 96/2024”), enacted on 2 September 2024, introduces key provisions on Energy Buffer Reserves (Cadangan Penyangga Energi or “CPE”). In simple terms, CPE represents the total amount of energy resources available and stored to meet the national energy needs at any given time.
The Central Government, through the Minister of Energy and Mineral Resources, is tasked with ensuring the availability of CPE. However, the regulation also opens the door for State-Owned Enterprises (“BUMN”) and licensed private companies in the energy sector to take part in this critical responsibility.
The Purposes of CPE Provision
Reg 96/2024 outlines specific aims for the establishment and maintenance of CPE. According to Article 2 Paragraph (3) Reg 96/2024, CPE provision aims to:
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Ensure national energy strategy: Reg 96/2024 serves to align the reserves with national energy strategies, reinforcing governmental objectives in energy diversification, sustainability, and security.
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Overcome energy crises and energy emergencies: One of the primary functions of the CPE is to act as a buffer in times of crisis. Whether due to natural disasters, geopolitical instability, or economic disruptions, having a well-structured reserve will help mitigate the potential impacts and ensure that essential services continue uninterrupted; and
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Carry out sustainable development: CPE aims to promote the responsible management of energy resources, encouraging practices that align with both environmental sustainability and economic viability.
Type, Amount, and Timing of CPE
Reg 96/2024 specifies the types and amount of CPE, that includes:
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Gasoline, which is used as a transportation fuel in the amount of 9.64 million barrels;
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Liquefied Petroleum Gas (“LPG”) as fuel for industrial, transportation, large, medium, and small commercial, farmers, fishermen, and households in the amount of 525.78 thousand metric tons; and
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Petroleum used as raw material oil refinery operations in the amount of 10.17 million barrels.
These allocations are structured to meet national energy demands, with a set target to be achieved by 2035, contingent upon Indonesia’s financial capacity.
However, the type, quantity, and timeline of CPE allows for adjustment, based on proposals from the National Energy Council (Dewan Energi Nasional or “DEN”) members or relevant agencies. The proposed adjustments will be decided through a periodic meeting of the DEN chaired by the daily chairman of the DEN and attended by DEN members (“Members’ Meeting”), and stipulated through a Regulation of the Minister of Energy and Mineral Resources.
CPE Location
The successful implementation of CPE is not only dependent on the quantities specified. CPE locations must also meet the following technical and feasibility requirements:
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Geological aspects;
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Accessibility for distribution and service;
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Regional spatial plan;
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Geopolitical, legal, defense, and security aspects;
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Environmental aspects;
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Infrastructure capacity;
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Funding;
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Risk mitigation planning; and/or
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Potential energy crises and/or energy emergency.
The determination of CPE locations will take place and stipulated in Members’ Meeting.
CPE Management
In terms of CPE management, the DEN is responsible for supervising the implementation of CPE rules. The outcomes of DEN’s supervisory activities will be discussed in the Members’ Meeting, with findings reported to the Chairman of DEN or presented at the Plenary Meeting. Subsequently, decisions made during the Member’s Meeting and/or Plenary Meeting is set forth in the form of recommendations, to be followed up by DEN members and related parties in the implementation of CFE management.
Key elements of CPE management include:
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Procurement of CPE supplies, sourcing CPE from domestic and/or foreign production.
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Provision of CPE infrastructure, essential facilities for storage and channeling or distribution of CPE infrastructure, consisting of main and supporting facilities.
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CPE maintenance, regular CPE inventory maintenance and CPE infrastructure maintenance.
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CPE Usage, in accordance with its nature, CPE will only be used in the event of an energy crisis and/or energy emergency. The mechanism for determining an energy crisis and/or energy emergency is regulated in Presidential Regulation Number 41 of 2016 (“Reg 41/2016”).
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CPE Recovery, carried out to keep the CPE in its original condition after use.
CPE Funding
The funding will include expenses required to determine the type, amount, timing, and location of CPE. In addition, the funding is also used for activities related to the procurement of CPE supplies, provision of CPE infrastructure, CPE maintenance, CPE usage, and CPE recovery. Funding sources may be drawn from the State Budget (Anggaran Pendapatan Belanja Negara or “APBN”), and/or other sources of revenue that are legally authorized and in accordance with laws and regulations.