[Discussion Report] PYC International Energy Conference 2017 – Parallel Session for Room 3

The third room of International Energy Conference (IEC) parallel session consists of four paper presentations which discussed a more economical and social approach in the energy sector. Four presenters were reviewed by Dr. Sharifah Munirah Alatas who’s a lecturer from University Kebangsaan Malaysia, UKM, Faculty of Social Sciences and Humanities and Dr. Inka Yusgiantoro as the Head of the Supervisory Board for the Purnomo Yusgiantoro Center (PYC).

The presentation was opened by the first paper presenter, Mr. Tutuka Ariadji, with the title presentation of “The Study of Gas  Resources Utilization of Tangguh, Masela, and Kasuri Blocks for East Indonesia Regional Development.” The paper was written by a collaboration of seven authors from Lemigas (Research and Development Centre for Oil and Gas Technology), ITB (Bandung Institute of Technology), and SKK Migas (Special Unit of Upstream Oil and Gas of the Republic of Indonesia). This paper is an analysis of the economic impact which relates industries which contribute to the national economy in the Eastern of Indonesia. The analysis uses IROI (Interregional Input Output) model consisting of 35 sectors and 35 provinces in 2010. The findings show that Maluku and West Papua Province have prospective economic improvement from the utilization of natural gas potential in Eastern Indonesia. With the best scenario, there are increases of GDP at about 19%, wages at about 20%, and employment at about 55%.

The second presenters are Mr. Fikri Permana and Mr. Andrew Toedjono, as they talked about “The Analysis of Volatility Transmission between Oil Price, Gold Price, and USD Exchange Rate at Different Oil Price Era”. This paper uses Multivariate (BEKK)-GARCH model, and they divide the series data between high-oil price (January 2, 2012 – December 5, 2014) and low-oil price (December 8, 2014, and June 30, 2017). They have 1,412 data observations, in which data of high-oil price reflect the period when West Texas Intermediate (WTI) above USD 65 per barrel and low-oil price to reflect the period when WTI below USD 65 per barrel. The paper found from GARCH effect that has a different pattern of volatility transmission among eras. During the high-oil price era, bidirectional volatility transmission is between WTI-USDX and Gold-USDX and when low-oil price era, bidirectional volatility only happens between Gold and USDX.

The third presenter, Mr. Kevin Marsahala Siahaan discussed “New Renewable Energy Investment of Potential Funding of Electricity Power Project with the Role of Customers as Investors through Solar Cell Photovoltaic Rooftop Business Model.” The background of this research paper is to provide a strategic path for PLN to implement the 35.000 MW program. Besides using private funding through Independent Power Producers (IPP) Mechanism, there is another funding element named Photovoltaic Solar Rooftop from Customers through PLN subsidiary, which does not burden the company’s cash in this case for PLN. The analysis of business process with the result of Break Even Point (BEP), the Internal Rate of Return (IRR) is only 1.52%, while Gross Profit Margin is 0.15, and Net Profit Margin is 0.12%. This paper mention that this business is a cash cow because it has high market share and low market growth that could be implemented by cash purchase, installment, lease and power purchase agreement of 4.4 kWp Solar PV installations with four PLN’s tariff class. This analysis means that PLN could increase revenue around IDR 492 trillion in 30 years.

The last presenters are Mr. Indradarma Adiwibowo and Ms. Dita Anggun Lestari, with the title of research “Enhancing Security Through Utilization of Local resources Case Study: Biomass Utilization in Berau Regency, East Kalimantan.” The paper explores the idea of a biomass power plant which is owned and operated by local people in the village itself. First, the presenters conducted a literature study, followed by a site visit to two palm oil company in Berau Regency in Talisayan and Segah Subdistrict. Further, they compared village data to assess the possibility of a village-owned biomass/biogas plant. The authors use cash flow analysis to calculate the feasibility of constructing a biomass/biogas power plant and found that a biomass power plant with 1.7 MW capacity needs IDR 46,780,000,000 and biogas power plant with 1.7 MW capacity needs IDR 41,530,000,000. These costs are too high for the villages to finance themselves. This problem leads the government to challenge the private sectors to invest and utilize biomass/biogas from oil industries. The project economically feasible and profitable with NPV up to IDR 65,078,072,000 and IRR is 20% for biomass plant and NPV up to IDR 14,330,070,000, and  IRR is 10% for the biogas plant.

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