Pekanbaru, 8 July 2026 — The Riau Provincial Government held a Consultation on the Development of a Guideline Document for a Climate Regional Public Service Agency (BLUD) together with Perkumpulan Mandala Katalika (MANKA), with support from the GREEN for Riau Initiative and the UNEP UN-REDD Programme Indonesia.
The activity, held at the Rustam S. Abrus I Meeting Room, Bappeda Riau Province Office, also involved representatives from several directorates within the Ministry of Home Affairs as resource persons and discussion participants.
This consultation was carried out to gather inputs from the Riau Provincial Government on the draft Guidelines for Preparing Administrative Documents for the Implementation of a Regional Public Service Agency Carrying Out Emission Management Functions.
The discussion covered institutional options, regulatory alignment, governance, human resources, financial management, and types of services that could be provided by a BLUD to support climate programs and financing at the regional level.
Strengthening Regional Climate Finance Institutions
The activity was attended by representatives of the Directorate for Synchronization of Regional Government Affairs I, Directorate General of Regional Development; the Directorate of BLUD, Regional-Owned Enterprises, and Regional Assets, Directorate General of Regional Finance; and the Directorate for Institutional and Personnel Facilitation of Regional Apparatus, Directorate General of Regional Autonomy, Ministry of Home Affairs. The Acting Head of the Riau Provincial Environment and Forestry Agency was represented by Matnuril.
Director of Perkumpulan Mandala Katalika, Juliarta Bramansa Ottay, explained that the guideline development was motivated by the need for a permanent institution capable of managing climate programs and finance at the regional level.
Based on lessons learned from several results-based emission reduction programs in East Kalimantan and Jambi, institutions established only for the duration of a project face sustainability challenges once the program ends.
According to him, regional governments need to play a stronger role so that climate finance and program management can be carried out closer to communities and the areas where activities are implemented.
The consultation in Riau was part of a series of consultations previously held in West Kalimantan and Jakarta.
Financing Innovation to Support Climate Targets
Bambang Arifatmi, Country Coordinator of the UNEP UN-REDD Programme Indonesia, stated that GREEN for Riau is an initiative of the Riau Provincial Government to support the achievement of Indonesia’s Nationally Determined Contribution (NDC) targets through a jurisdictional emission reduction approach.
Riau holds a strategic ecological position because it has peatlands, mangroves, forests, and various important ecosystems that store large carbon stocks. However, achieving emission reduction targets requires financing that cannot rely solely on government budgets.
Therefore, financing innovation is needed through various sources, such as grants and philanthropy, blended finance, results-based payments, carbon trading, payments for environmental services, and the mobilization of public and private finance.
Bambang emphasized that the institution managing such financing must be built on the principles of transparency, accountability, professionalism, and good governance.
Institutional Choices Need Careful Assessment
Head of Bappeda Riau Province, Purnama Irwansyah, stated that the Riau Provincial Government is exploring various institutional options to manage climate programs and financing, including BLUD, regional-owned enterprises, and other forms of financial intermediary institutions.
According to him, the choice of institutional model cannot be based solely on financial management flexibility. The selected model must have a clear service function and business model, realistic revenue projections, and the capacity to manage financing from various sources over the long term.
The Riau Provincial Government’s experience in managing regional-owned enterprises and BLUDs also needs to serve as a lesson. A BLUD must still be able to provide public services, while also requiring sound operational planning so that it does not depend entirely on the regional budget.
Purnama also emphasized that revenue from results-based payments cannot automatically be treated as BLUD operational income. Therefore, further analysis is needed regarding the types of services that will become the institution’s main tasks, fund management mechanisms, and the institutional relationship with other regional agencies.
The Guideline Offers Three Institutional Scenarios
During the technical session, Yessica Rachmadina from the MANKA writing team presented the draft guideline currently being developed. The guideline offers several implementation scenarios according to the conditions of each province.
The first scenario is intended for provinces that already have a relevant Regional Technical Implementation Unit or UPTD but have not yet applied the BLUD financial management pattern.
The second scenario applies to regions that already have a BLUD but do not yet have functions related to program management, climate finance, or emission management.
The third scenario is intended for provinces that do not yet have a relevant UPTD and need to establish a unit first in accordance with applicable laws and regulations.
The draft guideline also includes substantive, technical, and administrative requirements for BLUD implementation, including the preparation of governance arrangements, strategic plans, minimum service standards, financial reports, and mechanisms for guidance and supervision.
Rima Yuliantari from the Environmental Subdirectorate, Directorate for Synchronization of Regional Government Affairs I, Directorate General of Regional Development, Ministry of Home Affairs, emphasized the need to first map existing UPTDs owned by regional governments.
If a relevant unit exists, regional governments may consider strengthening or adding functions without immediately establishing a new organization.
In the Riau context, the environmental laboratory technical unit was one of the options discussed. However, any addition of functions must still consider the scope of authority, workload, cross-sector coordination needs, and alignment between the laboratory’s technical functions and the functions of program management and climate finance.
BLUD Is One Option, Not the Only Model
Wisnu Saputro from the Directorate of BLUD, Regional-Owned Enterprises, and Regional Assets, Directorate General of Regional Finance, Ministry of Home Affairs, explained that BLUDs and regional-owned enterprises have different characteristics.
Regional-owned enterprises are essentially oriented toward business activities and profit, while BLUDs are established to improve the quality of public services and do not prioritize profit-seeking. Nevertheless, a BLUD can still generate revenue and manage it to improve services.
The implementation of a BLUD must also be preceded by the existence of a clear technical unit and a firm separation between the regional agency as regulator and the UPTD as service operator. The BLUD implementation process must follow Minister of Home Affairs Regulation No. 79 of 2018 on Regional Public Service Agencies.
Therefore, the choice between a BLUD, regional-owned enterprise, or other institutional model must be aligned with objectives, service types, financing scale, and regional government capacity.
Director of Institutional and Personnel Facilitation of Regional Apparatus, Directorate General of Regional Autonomy, Ministry of Home Affairs, Efrimeiriza, emphasized three main principles that must guide institutional structuring: effectiveness, efficiency, and accountability.
The institution established must be fit for function, fit for size, and fit for process. The establishment or strengthening of a unit must not create overlapping authority among regional agencies or add bureaucratic complexity without producing tangible benefits for communities.
She also emphasized the importance of assessing institutional readiness, accounting systems, and human resource capacity. In addition, benefit-sharing mechanisms from climate programs need to be designed fairly by involving local communities, Indigenous Peoples, and women’s groups.
Gap Analysis as a Follow-Up
The discussion indicated that a BLUD is one option that can be considered, but it has not yet become the final decision of the Riau Provincial Government.
Participants highlighted that future climate finance may come from many programs with different requirements, implementation periods, reporting systems, and oversight mechanisms.
The institution selected needs to have the ability to manage funds professionally, coordinate programs across regional agencies, mobilize public and private finance, and maintain transparency and accountability.
The scope of services also needs to be defined specifically so that the institution does not take over all functions of regional agencies.
As a follow-up, GREEN for Riau will encourage the preparation of a gap analysis covering regulatory aspects, institutional capacity, human resources, budgeting, financing, and service models.
This analysis is needed to determine the most effective institutional form and the one most suited to the conditions of Riau Province.
All inputs from the consultation will serve as materials to refine the guideline document. The guideline is expected not only to explain the administrative process for establishing a BLUD, but also to provide practical options for regional governments in building institutions to manage climate programs and finance in a sustainable, transparent manner that can be implemented according to each region’s capacity and needs.