Ahead of OECD Accession, Prepare Independent Electricity Supervisory Agency

A study by the Center for Energy Studies of Universitas Gadjah Mada (PSE UGM) recommends the establishment of an independent institution to strengthen electricity governance ahead of Indonesia's accession to the Organization for Economic Co-operation and Development (OECD). With supervisory functions to tariff regulation, the future situation and conditions determine the urgency of the establishment of this institution.

The recommendation was put forward in the dissemination of "Strengthening National Electricity Governance Towards OECD Accession" organized by PSE UGM in collaboration with the Purnomo Yusgiantoro Center at the office of the Coordinating Ministry for Economic Affairs, Jakarta, Friday (17/10/2025).

Chairperson of the Purnomo Yusgiantoro Center Filda Yusgiantoro said the study, which was compiled over six months from March to September 2025, involved ministries, state-owned enterprises, the private sector and academics. The study document, according to her, became a recommendation to support the government's energy transition policy.

"Electricity is the backbone of economic development and the foundation of Indonesia's competitiveness in the energy transition. Improving electricity governance is very important to prove Indonesia's commitment, including Indonesia's plan to join the ASEAN Power Grid," said Filda referring to the regional initiative launched in Kuala Lumpur, Malaysia, on October 15, 2025.

According to Filda, in addition to realizing healthier and more coordinated governance, the study's recommendation to establish an independent oversight institution aims to generate public trust in electricity service providers, while proving that Indonesia has transparent energy governance.

"In Southeast Asia, no country has entered the OECD. Strengthening electricity governance will be a lever for Indonesia's competitiveness, as well as provide an example of best practices by increasing the renewable energy mix and showing commitment to energy transition," he said.

Representing the public

The establishment of an independent oversight institution for electricity governance serves to represent the public interest in the management of electrical energy nationwide. In order to maintain independence, the accountability of this institution is addressed to the President as the Head of State.

Chairman of PSE UGM, Sarjiya, explained that the effort to achieve a large renewable energy mix target requires healthy governance to ensure the target is achieved. When the entire energy sector is directed towards electrification in the context of energy transition, independent institutions that act as supervisors and measure social, economic, and environmental aspects are very important.

"In preparing this study, we conducted focus group discussions (FGDs) with all stakeholders, starting from the Ministry of Energy and Mineral Resources (ESDM), BP BUMN, Ministry of Finance, Coordinating Ministry for the Economy, Bappenas, PLN, and various business associations," Sarjiya said when presenting the outline of the study.

The blueprint for an independent institution proposed by the study aims to bridge technical and legal issues, while also addressing reinforcement. The autonomy of the institution in terms of technical, financial, and procedural aspects is a requirement to carry out a number of functions, ranging from verifying tariff rates, supervising the issuance of electricity business licenses, resolving disputes, and facilitating consumer protection.

The study found that with an independent body strengthening the electricity sector, a number of benefits can be identified. First, it encourages the achievement of renewable energy targets. Second, it improves efficiency, service quality, system reliability and integrity standards. Third, the follow-on impact of strengthening governance is to strengthen investment interest and realization.

"With an independent power sector agency, we expect an efficient and transparent governance design, assisting in the development of a transition roadmap, and synergizing with national institutions to ensure coordination can be bridged," he said.

In order to fulfill public representation, the independence of the institution is measured on a merit basis and the participation of representatives from academia, government, and the business world. However, Sarjiya underlined that the composition of the membership and the division of roles are technical aspects that are currently yet to be determined.

The establishment of this independent institution, according to Sarjiya, has been done in a number of countries to connect the government as the regulator and the business world as the user of electricity services. He cited Spain and South Korea as examples. In both countries, state-owned electricity companies become regulators with full control, but the role of the private sector in the generation sector remains open to encourage economics.

"This independent institution is a melting point related to electricity issues, energy mix, power purchase price, and tariff setting mechanism to ensure all costs caused by its operations can be covered from electricity revenues," Sarjiya concluded.

Needs increase

Strengthening electricity governance becomes relevant when the need for electricity consumption increases over time. Currently, with the growth of business electricity consumption reaching 4.7% YoY, industrial electricity consumption reaching 2.3% YoY, and household electricity consumption reaching 0.7% YoY by September 2025, electricity distribution is an aspect that needs to be monitored.

SUAR has requested confirmation from PT PLN (Persero) VP Corporate Communication Gregorius Adi Trianto regarding this matter. However, until the time this news was compiled, SUAR did not get the answer concerned.

Meanwhile, to ensure that the need for equitable energy access is answered, the Ministry of Energy and Mineral Resources launched the New Electricity Installation Assistance (BPBL) program in Banyuasin, South Sumatra, Thursday (16/10/2025). The program provides free electricity installations for poor households, especially in frontier, outermost, and disadvantaged areas or 3T.

On the occasion, Minister of Energy and Mineral Resources Bahlil Lahadalia emphasized that equal distribution of electricity is a tangible manifestation of the presence of the state for all people. The Prabowo Subianto administration specifically targets 5,700 villages and 4,400 hamlets that have not been electrified to receive assistance by 2029.

"This program is a form of government presence in paying attention to the needs of the people, especially the ESDM sector, which we will continue to do until all are electrified. Indonesia has been independent for 80 years, there are still villages that have not been electrified," Bahlil said.