Industry Updates

Government Tightening Its Grip on Water Resources

Four years after the 2004 Water Resources Law was annulled by the Constitutional Court, the new water law was finally issued on 16 October, i.e., Law No. 17 of 2019 on Water Resources (New Water Law). There is only one type of license under the New Water Law, i.e., Water Resources Use License (Izin Penggunaan Sumber Daya Air). This license can be granted for use of water resources:

(i) for business purposes, for the use of water, water resources and/or water power (daya air) as a medium and/or material (i.e., Water Use Business License), and

(ii) for non-business purposes, such as for daily use, people's farming, and other non-business activities (i.e., Water Use Non-business License).

The Water Use Business License is prioritized for state/region/village-owned entities (S/R/V-OEs). It can be granted to a private business entity if, among other things, it has been first offered to S/R/V-OEs. However, particularly for businesses producing drinking water for the public, the license is granted to S/R/V-OEs. There is no exception to this provision. Further provisions regarding Water Resources Use Licenses will be regulated in a government regulation.

Comparison between MEMR Regulation No. 27/2006 and MEMR Regulation No. 7/2019

In a bid to encourage a greater amount of oil and gas exploration and exploitation activity, the Minister of Energy and Mineral Resources (MEMR) recently issued MEMR Regulation No. 7 of 2019 on the Management and Utilization of Oil and Gas Data (MEMR Regulation 7/2019). MEMR Regulation 7/2019 updates procedures relating to the management and utilization of various facts, information, hints and indications, which are generated through activities such as general surveys, as well as the exploration and exploitation of oil and gas resources (Data).

Previously, those procedures were addressed under the now obsolete MEMR Regulation No. 27 of 2006 on the Management and Utilization of Data Secured through General Surveys and the Exploration and Exploitation of Oil and Gas (Previous Regulation). In general, MEMR Regulation 7/2019 addresses the following specific matters:

1. data classification, acquisition and confidentiality
2. data transfers
3. data management
4. data utilization and membership
5. transfers of media and deletions of data

MEMR Regulation 7/2019 has been in force since 2 August 2019 and simultaneously repeals and replaces the Previous Regulation. To see a high-level comparison table between the two regulations, please click here.

MEMR Releases New Regulations on Captive Power Plants and Use of Roof Solar Power Plants

Reg 12 revokes MEMR Regulation No. 29 of 2012 on the Capacity of Power Plants for Private Purposes Based on Operational License (Reg 29).

Under Reg 29, owners of a captive power plant with a capacity of more than 200 kVA were required to obtain an Operational License issued by the Director General of Electricity (DGE) on behalf of the MEMR, relevant Governor or Regent (as applicable), and a Registered Certificate (Surat Keterangan Terdaftar or SKT) was required for a capacity of 25 kVA up to 200 kVA.

Reg 12 now provides the following:

1. Captive power plants with a total capacity of >500 kVA. The owner of this type of power plant must obtain both an Operational License and an Operational Worthiness Certificate (Sertifikat Laik Operasi or SLO).
2. Captive power plants with a total capacity of ≤500 kVA. The owner of this type of power plant does not have to obtain an Operational License or an SLO. However, the owner must submit a one-time report prior to the commencement of the electricity supply to the MEMR through the DGE or the relevant Governor in accordance with their authority. Further, the owner must ensure that the power plant has a manufacturer test result (hasil uji pabrikan), product certificates (sertifikat produk) or a product safety standard document (dokumen standar keselamatan) equivalent to SLO.
3. SKT is no longer required. Operational Licenses and SKTs issued before Reg 12 came into effect remain valid until they expire as long as the designation and the capacity of the power plant do not change.

MEMR Regulation No. 13 of 2019 (Reg 13) on Amendment to MEMR Regulation No. 49 of 2018 (Reg 49) on the Use of Rooftop Solar Power Plants by Customers of PLN

The amendments contemplated by Reg 13 were intended to bring the requirements to obtain an Operational License and an SLO for rooftop solar power plants in line with Reg 12.

Previously, under Reg 49, owners of rooftop solar power plants with a capacity greater than 200 kVA were required to obtain both an Operational License and an SLO.

Reg 13 now amends and relaxes certain provisions under Reg 49 regarding requirements to obtain an Operational License and an SLO, to comply with Reg 12, which is the current prevailing law. As a result, only rooftop power plants with a capacity greater than 500 kVA require both an Operational License and an SLO.

PLN customers that are in the process of applying for an Operational License and an SLO for rooftop solar power plants with a capacity ≤ 500 kVA will be affected by this relaxation.

MEMR Regulation No. 16 of 2019 (Reg 16) on the Second Amendment of Regulation No. 49 of 2018 (Reg 49) on the Use of Rooftop Solar Power Plants by Customers of PLN

Reg 16 also relaxes the requirements under Reg 49. Through this amendment, the MEMR has decided to facilitate industrial customers who want to have their own rooftop solar projects to supplement their electricity supply.

Reg 16 lowered the monthly capacity charge amount to only five hours, or one-eighth of the amount under the previous regulation. The amendment also eliminates the mandatory emergency energy charge.

Before today, PLN industrial customers who had rooftop solar projects were subject to a monthly 40 hours' capacity charge, which is the same as the amount payable by PLN customers that have load based captive power plants.

Please see our client alert on Reg 16 here.