Jul

14

Provisions Regarding Energy and Electricity according to Government Regulation number 25 of 2021

Law number 11 of 2020 concerning Job Creation (or generally referred to as the Omnibus Law) contains many new regulations regarding industrial activities, requiring the implementation of new regulations. Some of those new regulations are in Government Regulation number 25 of 2021 concerning the Implementation of the Energy and Mineral Sector (GR 25 of 2021) which mostly regulates coal and mineral mining activity, as well as electricity.

There are several interesting provisions to note, such as:

  • Holders of a Special Mining Business License (IUPK) are not subject to paying any royalties when carrying out activities to increase the added value of coal after obtaining a permit from the Ministry of Finance, which will be regulated further in a future ministerial decree (Article 3);
  • The obligation of SOEs (BUMN) assigned by the Minister of Energy and Mineral Resources (ESDM) to obtain a business license number to conduct geothermal exploitation to the Investment Coordinating Board (BKPM) (NIB) (Article 7);
  • Various arrangements for administrative sanctions and fines if provisions or obligations are not fulfilled.

Apart from the provisions above, GR 25 of 2021 also regulates electricity. The regulation stipulates that the process of generating, transmitting, distributing and selling electricity for the public interest can be carried out in an integrated manner by one business entity in one business area. However, Article 26 paragraph (7) contains criteria for Business Areas that must be met in order for the integrated activities to be carried out, namely:

  1. Existing Business Area holders are unable to provide electricity;
  2. Existing Business Area holders are unable to meet the level of quality and reliability;
  3. Holders of existing Business Areas must return part or all of their Business Areas to the Minister of Energy and Mineral Resources;
  4. The Business Area proposed by the Business Actor has not been reached by the holder of the existing Business Area; and/or
  5. The Business Area proposed by the Business Actor is an integrated area that manages energy resources in an integrated manner according to the pattern of electricity needs.

In carrying out Electricity Supply Business activities for the public interest, the business license holder is also entitled to cross rivers and lakes, the sea and public roads and railways use the ground and cross above or underground, cross above or under buildings that are built above or underground, cut down plants that get in the way, cross pipe gas and its infrastructure, and forest areas in order to maintain the reliability of the electricity supply. If the electricity supply activity uses other people’s land, the holder of the business license is obligated to provide compensation for land rights and when carrying out the aforementioned activities in a state, SOEs, or DOEs (BUMD) owned property, they must oblige to the regulations set by the Ministry of Finances.

Beside providing electricity for the public interest, if there is a business providing electricity for its own use that has a total power generation capacity of more than 500 Kilowatts in one electricity installation, it is necessary to obtain a Business License for the Provision of Electricity for its own use from the Minister of Energy and Mineral Resources and must have a certificate of operation worthiness. However, if the electricity supply is less than or equal to 500 Kilowatts, then it is enough to report to the Minister of Energy and Mineral Resources or the governor, but a certificate of operation worthiness as well as a product certificate document or a statement of responsibility for electricity safety from the installation owner must still be obtained. The product certificate document or a statement of responsibility for electricity safety from the installation owner must be evaluated by the Minister of Energy and Mineral Resources or the provincial governor and a registration number from the Minister of Energy and Mineral Resources must be obtained.

The parties that can provide them are SOEs, DOEs, private enterprises, public service entities, and cooperatives operating in the field of electricity support services in accordance with the classification (such as consulting, inspection and research, as stated in Article 31 verse (1)), qualifications (large, medium or small, which are determined based on the level of business capability and competence of technical personnel), and certificates of business entities supporting electricity services obtained through Business Entity Certification from the Minister of Energy and Mineral Resources or Business Entities Certification Agencies that have been accredited by the Minister of Energy and Mineral Resources. For the inspection and testing of electrical power installations, certification of electricity equipment and users and certification of business entities service for electric power support services that have obtained a business license and have been in business for three years, the accreditation requirements as determined by the Minister of Energy and Mineral Resources must be met. Meanwhile, specific to the inspection and testing service business of Electrical Power Installations in the field of Electrical Power Utilization Installation sub-sectors that install low-voltage electricity, accreditation must be obtained prior to running the business.

In this regulation, the Electrical Power Installation is divided into two parts, namely the Electricity Supply Installation and the Electricity Utilization Installation, both of which must have an operation-worthy certification from the Minister of Energy and Mineral Resources or the provincial governor in accordance with their authority or an engineering inspection agency accredited by the minister. Not only that, equipment and electricity power users must be given the Indonesian National Standard (SNI) and/or safety sign and employ engineering personnel who meet the competency standards proven by a competency certificate in accordance with the Classification and Qualifications in the Electricity field.

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