The Energy Regulation and Markets Review - Stikeman Elliott

Indonesia
New licences for commercial mining areas are issued though competitive tender
procedures. The details of tender process are yet to be issued through MEMR regulations.
A mining licence is granted in two separate phases of mining activities: exploration phase
and production operation phases. Exploration licences may be issued by either a regional
government or the central government (if the area covers more than one province),
depending on the location of the proposed mine and its associated infrastructure. The
authority to issue production operation licences depends on the location of the mine
infrastructure and the environmental impact of the project.
Mining licences for state reserved areas are issued by the MEMR, regardless of the
coverage of the mining area.
The 2009 Mining Law and its implementing regulations grant the MEMR
authority to require mining licence holders to supply mineral and coal for domestic use
in consideration of domestic mineral and coal requirements, such as for the mineralprocessing
industry and for domestic direct utilisation (coal requirements for fuel and
coal requirements for raw materials for domestic processing industries). The MEMR
sets the floor price for domestic market obligation sales, which are based on minimum
prices for export. The MEMR is also authorised to set the mineral and coal sales reference
price. The MEMR, through the Directorate General of Minerals and Coal, is responsible
for setting the benchmarked price for coal and metallic minerals, while Governors and
Regents in the regional governements are responsible for setting the benchmarked price
for non-metallic minerals and rock.
The MEMR has a regulatory and supervisory role within the energy and mineral
sector, and this role is based on the laws governing energy, electricity, oil and gas, and
minerals, as well as other sectors falling under the MEMR’s authority. Regulatory and
supervisory tasks are disseminated through ministerial regulations, and director general
regulations, decrees, as well as guidelines and circular letters. Fiscal and tax matters on
the energy and mineral sector are under the authority of the Ministry of Finance, which,
in issuing regulations concerning energy and minerals, works in coordination with the
MEMR. The legislator, the People’s Representative Body, has rights to question the relevant
Ministry on the implementation of Laws within each Ministry’s respective authority.
Regional governments (provinces and regencies), as a matter of decentralisation,
are given certain authority within the energy sector to issue permits and licences. The
MEMR may also assign a supervisory role to regional governments in implementing
supervision in the mining sector.
ii Regulated activities
Electricity
Since the 2009 Electricity Law came into effect, PT PLN is no longer the holder of
an exclusive electricity authorisation from the central government to provide electricity
for public use, and so no longer has a monopoly to supply and distribute electricity to
end customers. Instead, the provision of electricity for public use may be carried out
by state‐owned companies (‘BUMN’), regional-owned companies (‘BUMD’), private
business entities, cooperatives and non‐governmental organisations.
The 2009 Electricity Law divides the electricity business into two categories:
a activities involved in supplying electrical power, such as:
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