National Energy Policy

The Government has released the National Energy Policy on 25 January 2006 and the provisions of the policy came into immediate force. The National Energy Policy (NEP) is contained in Presidential Regulation No. 5 of 2006 (the “Regulation”) and is broadly defined to be the mechanism that will ensure energy security and supply in the support of development. In essence the NEP is the energy management tool of choice of the Government.

The NEP covers all energy sources, traditional and alternative, and sets out targets for 2025 in terms of the composition of fuel consumption. Interestingly, there is still a heavy reliance on fossil fuels such as oil and coal. The 2025 target for oil is less than 20% of the total. It is expected that natural gas will make up more than 30% of energy consumption at the same point in time. Meanwhile coal and liquefied coal is expected to make up at least 54% of energy used. Unfortunately, alternative new energy sources, although comprising a combined target of more than 15%, individually set targets of just 5% for biofuel; geothermal energy; and nuclear, hydro, and wind power.