Indonesia Power Report Q2 2008

The new Indonesia Power Report from BMI forecasts that the country will account for 1.69% of Asia Pacific regional power generation by 2012, with an increasing generation shortfall that provides a growing import requirement. BMI's Asia Pacific power generation estimate for 2007 is 6,709 terawatt hours (twh), representing an increase of 6.8% over the previous year. We are forecasting an increase in regional generation to 9,034twh by 2012, representing a rise of 48.1%.

Asia Pacific thermal power generation in 2007 is estimated by BMI at 5,084twh, accounting for 75.8% of the total electricity supplied in the region. Our forecast for 2012 is 7,162twh, implying 51.38% growth that reduces the market share of thermal generation to 72.1% - thanks partly to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Indonesia's thermal generation in 2007 is estimated at 121twh, or 2.38% of the regional total. By 2012, the country is expected to account for 2.09% of thermal generation.

For Indonesia, oil is the dominant fuel, accounting for 42.6% of 2006 primary energy demand (PED), followed by gas at 31.2%, coal at 24.2% and hydro with a 2.0% share of PED. Regional energy demand is forecast to reach 5,324mn tonnes of oil equivalent (toe) by 2012, representing 51.1% growth over the period. Indonesia's estimated 2007 market share of 3.20% is set to fall to 2.78% by 2012.

Indonesia is ranked fourth, just ahead of Malaysia in BMI's newly revised Power Business Environment rating, thanks to its low level of energy import dependence and excellent power consumption growth prospects. Several country risk factors offset some of the industry strength, and the country may struggle to keep rival Malaysia at bay, while it is no position to challenge Pakistan above it.

BMI is forecasting Indonesian real GDP growth averaging 6.03% per annum between 2006 and 2012, with a 2008 forecast of 6.20%. Population is expected to expand from 234.5mn to 245.3mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly.

The country's power consumption is expected to increase from an estimated 173twh in 2007 to 338twh by the end of the forecast period, leaving a shortfall in generation rising from an estimated 44twh in 2007 to 170twh in 2012, assuming 4.6% annual growth in generating capacity.