The Ministry of Energy and Mineral Resources (MEMR) plays a crucial role in guiding and overseeing the prioritization of the utilization of domestic goods and services in the effort to provide electricity. Recently, the MEMR issued a policy, namely MEMR Regulation No. 11 of 2024 on the Use of Domestic Products for the Development of Electricity Infrastructure (Permen 11/2024). The aim of Permen 11/2024 is to accelerate the development of electricity infrastructure while prioritizing the use of domestic products. The government emphasizes that the development of electricity infrastructure for public interest must use domestic goods and services.
The electricity infrastructure referred to includes power plants from renewable energy sources, power plants from non-renewable energy sources, and transmission networks, distribution networks, and substations. The regulation stipulates that owners of permits for Solar Power Plant (PLTS) projects may face sanctions in the form of permit revocation if they do not comply with the provisions of this regulation.
The obligation to use domestic goods and/or services for electricity infrastructure development projects funded by foreign loans or grants is subject to the provisions outlined in Permen 11/2024, unless otherwise specified in foreign loan agreements or grant agreements. Foreign loans or grants are intended for one (1) electricity infrastructure development project to meet domestic electricity needs, with at least 50% of the funding sourced from multilateral and/or bilateral creditors (development banks or financial institutions). This includes foreign grant agreements in the form of government-to-government grants, government grant channeling agreements, direct grants to businesses, or foreign loans in the form of government-to-government loans, government loan channeling agreements, or direct lending with or without government guarantees to businesses.
As for the raw materials that can be imported by permit holders to establish their industries in Indonesia, they must comply with the conditions outlined in Permen 11/2024. The import limit for components for PLTS can be carried out until June 30, 2025, with a commitment to a Power Purchase Agreement (PPA) for projects that have been conducted before December 31, 2024. With this policy, the Indonesian government hopes that the development of electricity infrastructure in Indonesia can proceed more quickly and efficiently while continuing to support the development of the local industry.
Sanctions can be imposed on permits that do not establish PLTS industries domestically following the new rules that relax the Domestic Component Level (Tingkat Komponen Dalam Negeri or TKDN) regulations. The sanctions include written warnings, temporary suspensions, administrative fines, and/or revocation of electricity supply permits for public interest.
Permen 11/2024 marks a significant step towards enhancing Indonesia’s electricity infrastructure while prioritizing domestic products and services. By implementing strict guidelines and sanctions, the MEMR not only aims to accelerate infrastructure development but also to foster a robust local industry capable of meeting the nation’s growing energy needs. This policy reflects the government’s commitment to ensuring that public interest remains at the forefront, promoting sustainability and economic growth through the use of domestic resources. As Indonesia embarks on this vital journey, the collaboration between the government, private sector, and local communities will be essential in realizing a resilient and self-sufficient energy future. By embracing this policy, we can look forward to a brighter, more sustainable Indonesia where domestic capabilities shine, empowering the nation to thrive in the face of global.
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Author:
Dewi Susanti