PLN Won’t Retire Cirebon Power Plant Eligible for JETP Funding
Remember JETP? It was a $21.6 billion multinational commitment of loans and direct credits for assisting Indonesia move away from coal power. One such project that seemed ripe for JETP funding was the 660 MW Cirebon coal fired plant. However, PLN has just announced it wants to keep the plant operating until the end of its PPA agreement, raising concerns over Indonesia’s commitment to JETP.
According to PLN’s calculations, retiring the Cirebon-1 plant just five years earlier than its scheduled end of its PPA in 2042 would cost the firm an estimated Rp 130 trillion (US$8.4 billion). This colossal sum includes Rp 60 trillion in remaining contract payments owed to the plant’s independent power producer (IPP), plus an additional Rp 70 trillion needed to build replacement renewable energy infrastructure.
Explaining the replacement cost PLN maintains that substituting Cirebon-1’s 600 MW output would require approximately 3,600 MW of solar capacity and significant battery storage to maintain grid stability, rendering an early closure “a highly financially burdensome option.”
When asked about the cancellation plan mentioned in the Petromindo report, Coordinating Economy Minister Airlangga Hartarto said the Cirebon-1 plant was still relatively young, with a long remaining operational period, and used technology that was “relatively better” than that of many other coal plants in the country.“We’re looking for alternative plants that are older and less environmentally friendly,” he said at a press conference in Jakarta on Friday, flanked by representatives of JETP partner nations. Airlangga added that the funding previously prepared by the Asian Development Bank (ADB) for the early retirement of the Cirebon-1 coal-fired power plant would not be forfeited. Instead, the funds would be reallocated to finance the early retirement of other coal plants that better meet the established criteria.
Experts are now pressing the government to spell out which plants might replace Cirebon-1 in the retirement pipeline and the criteria guiding that selection. Energy market intelligence outlet Petromindo reported on Wednesday that PLN “has officially canceled” its plan to retire the 660-megawatt (MW) Cirebon-1 coal-fired power plant early because of economic viability concerns. The collapse of the deal to retire the Cirebon-1 coal-fired power plant early has left Indonesia’s landmark Just Energy Transition Partnership (JETP) searching for a new direction, with experts highlighting slow disbursement and a mismatch in funding priorities.
Fabby Tumiwa, the executive director of the Institute for Essential Services Reform (IESR), said JETP funding overall is still slow, with the first tranche of approved financing primarily allocated to pre-existing state utility (PLN) projects and some private rooftop solar initiatives. The more transformative US$5.5-$6.2 billion for early coal retirement, solar power, geothermal and de-dieselization projects, on the other hand, remains in progress, delayed partly by the late issuance of PLN’s 2025-2034 electricity business plan (RUPTL), he added. “The disbursement of JETP funding is still progressing too slowly,” Fabby told The Jakarta Post on Tuesday. “Most of the [approved] projects are okay. As for the MRT project, I understand, it’s for [transportation system] electrification. But the real goal here should be powering it with renewable electricity.”
According to the Progress Report the JETP Secretariat published on Oct. 24, JETP has approved $2.85 billion in financing as of September, consisting of five programs and four projects. (Jakarta Post and other sources)
Employer’s Association Projects 5-5.4% GDP Growth in 2026
The Indonesian Employers Association (Apindo) expects the economy to grow between 5 and 5.4 percent in 2026, projecting an “optimistic but cautious” outlook and warning that performance will hinge on policy support and Indonesia’s ability to navigate global risks. The figure is relatively lower than Bank Indonesia’s projection of 4.9 to 5.7 percent GDP growth next year. Apindo chairwoman Shinta W. Kamdani said the first quarter of 2026 was likely to deliver the year’s strongest momentum as New Year, Lunar New Year, Ramadan and Idul Fitri will drive spending across trade, logistics, accommodation, tourism and consumer-related industries. However, she cautioned that a growth deceleration could emerge in the second and third quarters once seasonal effects fade, particularly if the government does not introduce fresh pro-growth policies to sustain activity.
Apindo warned that global uncertainty would remain elevated in in 2026, citing potential policy shifts under United States President Donald Trump, continued tensions in the South China Sea and the implementation of the European Union Deforestation Regulation (EUDR). These factors could affect the performance of Indonesia’s commodity exports and manufacturing sectors, especially those integrated into global value chains.“We also note that several business sectors are still lagging behind national growth, underscoring the need for cross-sector strategies to promote more inclusive and sustainable expansion,” she said at the 2026 Economic Outlook press conference held in Jakarta on Monday. The outlook is also clouded by domestic challenges, including the large-scale disasters that struck North Sumatra, West Sumatra and Aceh in recent weeks.“We still cannot evaluate the extent of the impact on 2026. But as we see it now, we are still in the mitigation phase,” Shinta said. Fourth-quarter 2025 growth, meanwhile, is expected to land at 5.1 to 5.3 percent, APINDO says, falling short of the government’s more upbeat 5.6 percent projection.(Jakarta Post)
Proposed Minimum Wage Rates Irk Employers
Employers and labor unions have both voiced dissatisfaction with the government’s new formula for setting minimum wages in 2026, with businesses warning that the proposed increases are too high and could push up prices, while unions say they still fall short of meeting living standards. President Prabowo Subianto on Tuesday signed a regulation setting a new formula, broadly in line with previous years, combining inflation and economic growth and adjusted by an “alpha” coefficient reflecting labor’s contribution within a specified range. The coefficient for next year will range between 0.5 and 0.9, with provincial leaders having until Dec. 24 to determine the size of next year’s minimum wage increase using the new formula. Under the formula, provincial minimum wages would rise by between 5.3 percent and 7.3 percent, an increase employers deem too steep and misaligned with fragile business conditions and productivity growth of only around 1.5 to 2 percent. “This level of increase is too high relative to productivity levels and will weigh heavily on businesses,” Subchan Gatot, deputy head of labor affairs at the Indonesian Employers Association (Apindo), told The Jakarta Post on Thursday. “Companies do not oppose wage increases,” he emphasized. “But when wages rise far above productivity, the difference will be absorbed in higher prices, which is counterproductive when purchasing power is already weak (Jakarta Post)