Bahlil Rejects Coal Plant Retirement After Two Years Without Funding: No Money, No Deal

JAKARTA, investortrust.id – Indonesia’s Minister of Energy and Mineral Resources Bahlil Lahadalia has called out international donors for failing to deliver promised funding to support the country’s early retirement of coal-fired power plants.

Under the Just Energy Transition Partnership (JETP)—an initiative launched at the 2022 G20 Summit in Bali—wealthy nations pledged financial support to help Indonesia transition away from coal. However, as of now, no actual funding has materialized.

“In your promise (JETP), donor institutions are supposed to finance this. Where is the money? Until now, there’s nothing. Zero. We are willing to retire PLTU early, but we need the funds first,” Bahlil said at an economic forum titled "Accelerating Indonesia’s Economic Growth: Challenges and Opportunities in the New Era", held in Jakarta on Thursday, Jan 30, 2025, as reported by state news agency Antara.

Funding Shortfall Threatens Indonesia’s Energy Transition

Indonesia’s ambitious JETP roadmap aims to accelerate the phase-out of coal and expand renewable energy, backed by $20 billion in pledged financing from donor countries and international financial institutions. However, much of this funding has been structured as loans rather than grants or concessional finance, making it less attractive for Indonesia.

Bahlil made it clear that without secured financing, the government will not move forward with early coal plant retirements, as doing so would jeopardize the country’s energy security and potentially burden the state budget (APBN).

“Are we supposed to force APBN or PLN to issue more debt just to finance this? If the money isn’t there, sorry, boss, we need to protect domestic needs first,” he said.

At Least $4.8 Billion Required

In a separate discussion, Eniya Listiani Dewi, Director General of New and Renewable Energy at the Ministry of Energy and Mineral Resources (ESDM), explained that an inter-ministerial review is still underway involving the Ministry of State-Owned Enterprises (BUMN) and the Ministry of Finance. The plan to phase out PLTUs remains uncertain due to financing gaps.

The government, Eniya said, is also working with the Attorney General’s Office to develop a legal roadmap for early coal plant retirements. However, full financial backing is crucial.

“We need to secure a full funding package. If we’re talking about a complete package, it has to be $4.8 billion upfront,” she stated.

Economic and Health Benefits at Stake

Despite financial challenges, energy analysts argue that phasing out coal is in Indonesia’s long-term economic interest. According to Deon Arinaldo, Program Manager for Energy System Transformation at the Institute for Essential Services Reform (IESR), shutting down all coal plants under PLN’s grid by 2040 could prevent 182,000 premature deaths caused by air pollution and save approximately $130 billion (Rp 1,900 trillion) in healthcare costs.

Yet, the financial burden remains a major hurdle. The cost of decommissioning coal plants, including asset write-offs, government revenue losses, and worker transition programs, is projected to reach $4.8 billion by 2030 and could soar to $27.5 billion by 2050 if Indonesia accelerates coal phase-out efforts.

“International funding support is essential to ensure this transition is both fair and sustainable,” Deon said.

 

Lack of Progress Raises Frustration

Bahlil’s frustration stems from the slow progress of JETP, which was meant to be a flagship model for how emerging economies can transition from fossil fuels with international backing. However, with funding uncertainties and donor countries prioritizing their own energy crises, Indonesia is left in limbo.

While the JETP framework outlines a path for reducing coal reliance, without substantial financial backing, the plan remains largely aspirational. For now, Indonesia’s government is unwilling to take on additional financial risks without concrete donor commitments.