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.
|
|
Wednesday, 13 January 21
COAL TO BE BIGGEST CONTRIBUTOR TO INDIA'S $5 TRILLION ECONOMY: AMIT SHAH - BUSINESS STANDARD
The Centre on Monday awarded the letter of allocation to successful bidders of coal mines under the commercial auction held during October-November ...
Monday, 11 January 21
MUTED COAL RECOVERY IN 2021 - BALTIC EXCHANGE
Coal demand is expected to rebound in 2021
Medium-term outlook is less favourable although demand declines are expected to be subtle ...
Sunday, 10 January 21
KOREAN GENCOS INVITED BIDS FOR TOTAL 880,000 TONS OF COAL FOR MARCH 2021 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), on behalf of EWP, KOSPO, KOSEP and KOWEPO issued an international tender for total 880 ...
Friday, 08 January 21
INDIA COULD COMPETE AGAINST CHINA IN SOLAR MODULE PRODUCTION WITH THE RIGHT GOVERNMENT SUPPORT - IEEFA
The focus should be on helping manufacturers become globally competitive
Although one of the top 10 solar module producers in the world, India ...
Thursday, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
|
|
|
Showing 671 to 675 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Australian Coal Association
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
|
| |
| |
|
