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, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
|
|
|
Showing 621 to 625 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Australian Coal Association
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
|
| |
| |
|
