We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
 February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the Omnibus Law), which entered into force on 2 November 2020. In this ABNR legal update, we discuss Government Regulation No. 25 of 2021 on the Energy and Mineral Sectors.
The government has issued a new regulation to give effect to the provisions of the Omnibus Law[1] relating to the mineral, coal, geothermal and power sectors. While the regulation makes some important changes, the overall purpose appears to be primarily to codify existing secondary legislation governing the relevant sectors.
The new instrument, Government Regulation No. 25 of 2021 on the Energy and Mineral Sectors (the “Regulation”),[2] was issued on 2 February 2021.
Due to the wide-ranging scope of the Regulation, we confine our analysis to its key provisions in this ABNR Legal Update.
A. Mining sector
Under the Omnibus Law, the holder of a Production-Operations Mining Business License (“IUP”) or Special Production-Operations Mining Business License (“IUPK”) for coal may be entitled to a complete exemption from the payment of royalties if it processes its coal production domestically, compared to an obligation to pay royalties of 3% to 7% (depending of calorific value and mining method) if it does not process its production domestically. This incentive should help boost investment in the coal processing industry (e.g., coal slurry, coal gasification and coal liquefaction), which is currently less developed than the mineral processing and refining industry.
The Regulation provides that the financial incentive will be given after approval by the Minister of Finance. Although not expressly stated, we believe the Minister of Finance will require a recommendation from the Minister of Energy and Mineral Resources (“MEMR”) before giving such approval as the Regulation stipulates the former should take into account considerations relating to energy sustainability and the fulfillment of industrial needs for raw materials, both of which come within the purview of the MEMR.
The financial incentives are not available for all coal that is produced by a mining license holder but only for certain types of coal that are processed domestically.
B. Geothermal Sector
The Regulation makes provision for the imposition of administrative sanctions and penalties on geothermal businesses that: (i) indirectly use geothermal energy without the required license or in a way that contravenes their license; (ii) fail to commence activities in their allocated work area within the stipulated timeframe; or (iii) fail to comply with the obligations set out in their license or the laws and regulations in general. By contrast, the Geothermal Law only imposes criminal sanctions for non-compliance with licenses.
It is prohibited for a holder of a geothermal license to assign it to a third party. Any violation of this prohibition is subject to administrative sanctions. Further, it is prohibited, once again subject to sanctions, for the holder of a geothermal license to sell its shares on the Indonesia Stock Exchange (“IDX”) without MEMR approval prior to the exploration stage.
While the text of the Regulation in this regard appears to only apply to a geothermal company that is itself listed on the IDX, and not to the holding company of a geothermal company listed on the IDX, it is as yet unclear whether this particular provision will be construed narrowly so as to exclude a holding company or widely so as to include it. The Regulation also fails to explain how the prohibition will be implemented and, more specifically, whether the IDX will be required to monitor transfers of shares of IPB holders so as to ensure that the prohibition is not violated.
C. Power Sector
The Omnibus Law has relaxed the rules in a number of key areas of the power sector, including the rules on operations areas, electricity-sector support services and joint utilization of electricity networks. However, it also imposes new obligations on electricity consumers. These changes have now been further fleshed out in the Regulation.
Under the Regulation, the term “public interest electricity business” covers (i) electricity generation; (ii) electricity transmission; (iii) electricity distribution; and (iv) sale of electricity. These various activities can be integrated and conducted by a single undertaking. For that purpose, the holder of Public Interest Electricity Business License (Izin Usaha Penyedian Tenaga Listrik Untuk Kepentingan Umum) must apply for the allocation of an Operations Area, particularly for the distribution and sale of electricity. The Regulation further stipulates that MEMR must consider the following aspects in determining the allocation of Operations Areas:
-
The existing holder of an Operations Area is no longer capable of supplying electricity;
-
The existing holder of Operations Area is no longer capable of maintaining the quality and reliability of its electricity supply;
-
The existing holder of an Operations Area surrenders a part or all of its Operations Area to MEMR;
-
The Operations Area applied for is a remote area that has not been assigned to another Operations Area holder; and/or
-
The Operations Area applied for is a designated area for the development of integrated energy sources in accordance with its power needs.
While in practice we expect that PT PLN (Persero), the state power company and largest player in the Indonesian power sector, will continue to dominate the development of new or existing Operations Areas, the considerations listed above could still open opportunities for private investors to proactively seek out prospective Operations Areas for development.
The Regulation also establishes the following licensing and reporting requirements for own-interest power producers (i.e., operators of captive power plants):
> 500 kW – requires an Own-Interest Electricity Business License (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Sendiri) from MEMR or relevant provincial governor, plus a certificate of operational worthiness.
< 500kW - must submit a prior written report to the Minister or relevant governor and satisfy technical specifications, as evidenced by a certificate of operational worthiness and other technical documents to be registered with MEMR.
It interesting to note that the Regulation also imposes various new obligations on electricity consumers, Including obligations to ensure the security of their electricity installations, to use electricity in accordance with its purposes, to pay their electricity bills and to comply with technical requirements in the power sector. A consumer may be sued for any losses suffered by the holder of a Public Interest Electricity Business License if they fail to perform their obligations. This provision may also be regarded as setting out the minimum provisions that should be incorporated in an electricity purchase agreement between a power provider and its customers, including industrial customers.
As regards the electricity support services sector (“Support Services”), a foreign investor that wishes to carry on business in this field has the option of establishing a representative office / Kantor Perwakilan Asing (“KPA”). The Support Services that can be performed by a KPA are restricted to a list of clearly defined activities, including consultation on electricity installations, construction and installation of electricity infrastructure, and the maintenance of power installations. The projects developed by a KPA must also come within the “high cost” category, with a minimum contract value of Rp 100 billion for construction and installation activities.
It should be noted in this regard that the Regulation is somewhat unclear. While it goes into noticeable detail on the rules governing KPA, it is silent as to the role to be played by foreign invested companies (PT PMA) in the electricity support services sector.
As mandated by the Omnibus Law, the Regulation further provides for the joint utilization of power transmission networks by telecommunication, multimedia and IT companies. Such joint utilization must be based on the permission of the network owner, which may only be given if the joint utilization does not have the potential to disrupt electricity supplies. The network owner must submit a report to MEMR on its consent to joint utilization, enclosing certain supporting documents, including the joint utilization agreement and details of the telecommunications equipment to be installed in the power transmission network.
ABNR Commentary
Despite the lack of clarity and question marks regarding some provisions, as mentioned above, the Regulation fills in some obvious gaps in the Omnibus Law relating to the mineral, coal and power sectors. However, there remain a number of outstanding issues that require attention. In this regard, the Regulation incorporates an enabling provision that allows MEMR to take whatever action is required to resolve any issues that are not, or are inadequately, addressed in the Regulation. This is a new type of catch-all “fix-it-up” provision in Indonesian law that is also used in a number of other sectoral regulations issued under the Omnibus Law. It will be interesting to see the extent to which the MEMR, as well as other ministries, avail of this power to make legislative and regulatory changes going ahead.
By partner Mr. Freddy Karyadi and senior associate Mr. Mahatma Hadhi
Source: ABNR
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
Saturday, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
|
|
|
Showing 656 to 660 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- White Energy Company Limited
- Economic Council, Georgia
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- The University of Queensland
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- MS Steel International - UAE
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
|
| |
| |
|
