Local governments unprepared, pressuring workers affected by power plants closures

Celios and Indonesia Cerah held a hybrid discussion on Equitable Energy Transition: Challenges and Opportunities for Regions in Jakarta, Tuesday (18/7). (Photo: Celios)

Jakarta – The unpreparedness of local governments in implementing the energy transition will create pressure on the labour and income sectors of communities that depend on the supply chain of steam power plants (PLTU), according to a study by the Center of Economic and Law Studies (CELIOS) in collaboration with Yayasan Indonesia CERAH.

Economist and Director of CELIOS, Bhima Yudhistira, estimates that there are around 4,666 permanent and non-permanent direct workers who will be affected by the closure of coal-fired power plants in Langkat, Cilacap, and Probolinggo.

“That does not include indirect workers, namely MSME players around the PLTU location, as well as workers at the coal source location,” said Yudhistira in the dissemination of the findings of the Celios study and the CERAH Indonesia Foundation entitled “Equitable Energy Transition: Challenges and Opportunities for Regions”.

The study was conducted in three provinces, namely North Sumatra, Central Java, East Java and three districts in Langkat, Cilacap and Probolinggo. The study concluded that local governments have not actively participated in the Just Energy Transition Partnership (JETP) agenda. Even though the early retirement of coal-fired power plants will impact various economic indicators in the area where the power plant operates. On the one hand, he continued, the government plans to launch an energy transition funding follow-up plan or JETP on 16 August.

Muhammad Saleh, CELIOS researcher, added that most of the local governments that were the object of the research did not know and were not involved in the JETP energy transition policy. Specifically, local governments are unaware of Presidential Regulation No. 11/2023 on Additional Concurrent Government Affairs in the Energy and Mineral Resources Sector in the New and Renewable Energy sub-field. Even until now, the LG has not had a regulatory framework for implementing Perpres No. 11/2023. In addition, local governments stated that the existing regulatory framework has not been able to answer the needs of the energy transition.

On the aspect of local revenue and budget, according to CELIOS, there is a potential loss of local revenue (PAD) from the early retirement of PLTU, with a range of 1.2 to 6.4 per cent of the overall PAD in a district, which depends on the size of the coal power plant capacity in each region. (Hartatik)


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