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.
|
|
Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
|
|
|
Showing 66 to 70 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Economic Council, Georgia
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
|
| |
| |
|
