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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
|
|
|
Showing 11 to 15 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
|
| |
| |
|
