By: Akhmad Hanan


Since the first COVID-19 case in Indonesia was announced by President Joko Widodo on March 2, 2020, this pandemic began to impact on the productivity reduced in various sectors. The impact did not only occur in one sector but also in almost all activities. COVID-19 left all countries affected by the economic recession. The results of studies from the Organization for Economic Co-operation and Development stated that the economies of countries such as Turkey fell to minus 4.8 percent, Argentina minus 8.3 percent, Mexico minus 7.5 percent, South Africa minus 7.5 percent and Brazil minus 7.4 percent due to a pandemic.

One of the most significantly affected sides during this pandemic outbreak is the investment sector. The implementation of a large-scale social restriction policy (PSBB) in Indonesia certainly affects economic activity. The PSBB, issued on Government Regulation No. 21/2020, aimed to ease the control COVID-19 spreads by minimizing social interaction. Until June 2020, there are 17 regions in Indonesia that are divided into four provinces, including DKI Jakarta Province and 13 districts/cities implementing the PSBB policy. The Indonesian Investment Coordinating Board (BKPM) reports that COVID-19 is a severe threat that will affect economic stability and investment opportunity in Indonesia. Primarily, investment in the energy sector, which is one of the sources of state revenue. Besides, the energy sector is a sector whose rapid consumption growth is in line with population growth. Because of the pandemic, many energy projects have been delayed.

The Ministry of Finance in the scenario of economic growth modeling in 2020 estimates that the rate of investment growth or gross fixed capital formation (PMTB) only 1.3% (year on year/YoY) in the first quarter of 2020. In 2019, Indonesia’s PMTB was 5.03% (YoY) only in the first quarter.  Based on the data, the sectoral decline in investment realization occurred in the mining and quarrying and manufacturing sectors with the weighted net balance (SBT) of investment realization of -2.4% and -0.42%, respectively (, 2020).

Energy Investment Before Pandemic

Before the COVID-19 pandemic, the investment in the energy and mining sectors reached USD 31.9 billion in 2019, and USD 26 billion of total investment was invested in the energy sector. Specifically, the investment in the oil and gas sector reached USD 12.5 billion. Meanwhile, USD 12 billion and USD 1.5 billion were invested in the electricity sector and the new and renewable energy (NRE) conservation sector, respectively (Figure 1).

Figure 1. Energy and Mineral Resources Investment Realization

Investment in the electricity sector can increase the installed capacity of power plants. The realization of the installed capacity of power plants in 2019 was 69.1 Giga Watt (GW) (Figure 2), and it increased by 4.2 GW compared to 2018. Meanwhile, for the government program of 35,000 Mega Watt (MW), 5,071 MW has been operated, and 21,825 MW is in the construction phase. Then, 6,878 MW has not been constructed, 829 MW is in the procurement phase, and 734 MW is in the planning stage (ESDM K. , 2020).

Figure 2. Power Plant Capacity in 2019

Investment in the oil and gas subsector in 2019 has slightly decreased compared to the previous year. In 2018 investment realization was USD 12.6 billion, but it was USD 12.5 billion in 2019. The realization of 2019 oil and gas lifting was 1,806 MBOEPD or 89% of the target of 2,025 MBOEPD (Figure 3). Specifically, about 777 MBOPD oil was lifted, and 1,250 MBOEPD gas was lifted. Also, The 2019 lifting realization was decreased by 5.7% compared to 2018, in which the target of that year was 1,917 MBOEPD (ESDM K. , 2020).

Figure 3. Oil and Gas Lifting Realization

How about after the pandemic

After the COVID-19 outbreak, it significantly impacted on various fields and sectors, especially in the energy investment sector. Not only in Indonesia, but this condition also occurs worldwide. In Indonesia, the PSBB influences the continuity of the national energy infrastructure development program. Numerous problems occur, including supply chain disruptions, unavailability of labors, and project financing issues.

The government is preparing a strategy for the sustainability of energy projects after the pandemic. According to the Ministry of Energy and Mineral Resources (MESDM) press release No. 163. Pers/04/SJI/2020, the MESDM through the Director of Energy Conservation of the Directorate General of New and Renewable Energy and Energy Conservation will issue a policy to increase the investment during a pandemic by providing incentives and easing project funding, especially in the development of NRE (ESDM, 2020).

In order to attract more investment, the government will suspend loan installments to reduce interest rates on NRE projects. Besides, the government provides other relief in the form of relaxation of commercial operation date (COD) and the removal of financial penalties to adjust the procurement mechanism of Independent Power Producer (IPP). In addition the government is preparing provision of subsidies through the state budget (APBN) for the utilization of Biofuel. The government suspended and canceled value-added tax (PPN) and income tax (PPh) as incentives for the development of NRE.

Meanwhile, to accelerate recovery in the oil and gas subsector going forward after the pandemic, the government enacts:

  1. MESDM Regulation No. 8/2020 concerning Procedures for Determining Users and Prices of Certain Natural Gas in the Industrial Field.
  2. MESDM Regulation No. 10/2020 regarding Amendments to the Regulation of the MESDM N 45/2017 concerning Utilization of Natural Gas for Power Plants.
  3. MESDM Decree No. 89 K/10/MEM/2020 concerning Users and Certain Prices of Natural Gas in the Industrial Field; and MESDM Decree No. 91 K/12/MEM/2020 on the Price of Natural Gas at the Power Gate (Plant Gate).

These regulations are expected to increase gas utilization, especially for the industry sector. Special Task Force for Upstream Oil and Gas (SKK Migas) and the contractor of partnership contract (KKKS) have also signed a side letter of PSC agreement to provide legal guarantees for the contract and to create business certainty. The signing of the LoA is also required to provide business certainty for KKKS as producers in the upstream oil and gas sector and gas buyers (Migas, 2020).

After pandemic, for the next prospects in the oil and gas sector, the Ministry of Energy and Mineral Resources (KESDM) is looking for an investment to explore 10 WKs (working area) this year. However, the auction, that initially would be held in the first quarter of 2020, was postponed due to the COVID-19 outbreak. Currently, KESDM is conducting an evaluation and preparing an incentive strategy to attract investors (kontan, 2020).

For the electricity sector, the government has not revised the target in the Electricity Business Plan (RUPTL). The government is currently drawing up regulations that contain investment and financing opportunities in the electricity sector, for example, is the regulation to enhance geothermal development. It is because one of three geothermal projects (Sokoria Geothermal Power Plant (PLTP) project in East Nusa Tenggara) is threatened due to the impact of the COVID-19 pandemic. Until now, the government is working on various options, so the projects will finish as targeted (kontan, 2020).

As a suggestion for the government to increase the investment in the energy sector after the pandemic, the governments need to issue supporting policies such as tax incentives and bureaucratic process easiness. The government should also provide legal guarantees to facilitate investors in developing energy projects during a pandemic. The legal guarantee will be the answer to solve several energy project issues. For example, the energy projects that prone to overlapping land use, such as NRE development with water and geothermal power-based. It happened because it often hampered with local governments’ desire. The author hopes that the energy investment in Indonesia will remain attractive after the COVID-19 pandemic ends.

References (2020, April 14). 2020, Tahun Gelap Investasi Indonesia. Retrieved from

ESDM. (2020, April 22). Petakan Dampak Covid-19 di Bisnis EBT, Pemerintah Prioritaskan Proyek Padat Karya. Retrieved from

ESDM, K. (2020). Energi Berkeadilan. Jakarta: Humas ESDM.

kontan. (2020, June 1). Menakar potensi lelang Wilayah Kerja Migas di tengah pandemi Covid-19. Retrieved from

kontan. (2020, June 14). Temui sejumlah kendala, Kementerian ESDM belum revisi target panas bumi tahun ini. Retrieved from

Migas, S. (2020, June 17). Penurunan Harga Gas Membutuhkan Waktu untuk Mendukung Peningkatan Penyerapan Gas Industri. Retrieved from


*This opinion piece is the author(s) own and does not necessarily represent opinions of the Purnomo Yusgiantoro Center (PYC)

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