Govt considers opening strategic fuel reserve project to private investors

By Calvin Purba

The Indonesian government is considering revising regulations governing the country's Strategic Energy Reserve (Cadangan Penyangga Energi/CPE) to allow private sector participation in developing fuel storage facilities, as it seeks to reduce the fiscal burden of building the national strategic reserve.

Satya Widya Yudha, a member of the National Energy Council (DEN), said the proposal to revise the presidential regulation on the CPE is currently under discussion, although formal deliberations have yet to begin.

"The idea to revise the CPE regulation already exists. The consideration is that if the entire obligation is borne by the government, the financing requirement will be enormous. Therefore, private ownership of the storage facilities is being considered," Satya said during the Energy Hub Talkshow on Tuesday.

According to him, Indonesia would require investment of around US$5 billion to establish strategic energy reserves covering approximately 30 days of imports, equivalent to about 30 million barrels of storage capacity.

He said the reserve would likely comprise around 10 million barrels of crude oil storage, while the remaining capacity would be allocated for refined petroleum products.

"We estimate investment needs of around US$5 billion if we want to build storage equivalent to 30 days of imports. Of that capacity, around 10 million barrels would be crude storage, while the remainder would be petroleum products," he said.

Satya added that discussions remain at the conceptual stage, with policymakers evaluating the most appropriate financing and ownership model before proceeding with revisions to the existing regulation.

Indonesia has long sought to establish strategic fuel reserves to strengthen national energy security and improve resilience against global supply disruptions. However, the substantial capital requirement has remained one of the key obstacles to accelerating the development of the storage infrastructure.

In March, Bahlil Lahadalia said the Ministry of Energy and Mineral Resources was conducting a feasibility study for the CPE project and aimed to begin construction this year.

"The feasibility study is ongoing, and we are targeting for construction to begin this year," Bahlil said, without providing a detailed timeline.

The project forms part of the government's Energy Buffer Reserve (CPE) program, which aims to strengthen Indonesia's strategic fuel stockpiles.

The facility is expected to increase Indonesia's national energy reserves from around 21 days of consumption to 30 days.

The legal framework for the program was established under Presidential Regulation No. 96 of 2024 on Energy Buffer Reserves, signed by former president Joko Widodo on Sept. 2, 2024.

The regulation sets strategic reserve targets of 9.64 million barrels of gasoline, 525,780 metric tons of liquefied petroleum gas (LPG), and 10.17 million barrels of crude oil to help ensure stable domestic energy supplies and refinery operations.

To support the program, the government plans to allocate between Rp64 trillion (US$3.79 billion) and Rp69 trillion (US$4.08 billion) through 2035 to strengthen national energy security and maintain reserves sufficient to cover up to 30 days of demand during potential supply disruptions or emergencies.

Editing by Reiner Simanjuntak