I INTRODUCTION

As the fourth most populous country in the world and the largest economy in South East Asia, Indonesia's energy requirements are considerable and growing, and the country has set a target of achieving electricity generation capacity of 56,395MW by 2028,2 which includes accelerated development of the power generation programme (35,000MW).3 Although the majority of energy resources would predominantly continue to be derived from fossil fuels, there remains room for renewable energy sources to grow, and the PLN Electricity Plan 2019 suggests that the renewable energy sources sector will increase its portion of the national energy mix to 23 per cent by the end of 2025.4 Based on Indonesia's broader master plan, the government expects that by 2050 the use of renewable energy for power will increase to 31 per cent.5

The most developed renewable energies are hydropower and geothermal energy, with a total installed capacity of 5,024MW and 1,403.5MW respectively.6 These figures, however, are low in comparison with its total potential. In 2015, the development of renewable energy only reached 2 per cent of the total potential renewable energy sources in Indonesia.7 Despite attempts to broaden the offtaker base, PT Perusahaan Listrik Negara (Persero) (PLN) is, de facto, the sole offtaker in Indonesia, and independent power producers (IPPs) are required to sign a power purchase agreement (PPA) with PLN under a tariff approved by the government.

The following may have contributed to hindering potential investment in the development of renewable energy:

  1. fuel subsidies;
  2. legal uncertainties;
  3. a lack of incentives for the use of renewable energy;
  4. a land acquisition backlog;
  5. issues associated with the use of forestry areas for the development of renewable energy;8 and
  6. a new mechanism for the determination of Basic Production Prices as stipulated in MEMR 50/2017, as amended (see Section III.ii).

In spite of the government's commitment to optimising the development of renewable energy, there remain questions on how these issues would be addressed.

II THE YEAR IN REVIEW

PLN's electricity plan for 2019–2028, which has been approved by the Minister of Energy and Mineral Resources (MEMR), suggests projected average growth in electricity demand of 6.42 per cent. Significant capacity growth, from 1,200MW to 2,000MW, is expected for wind and solar sources. PLN is considering approximately 1,000 locations for new solar photovoltaic (PV) and wind farms to be built between 2019 and 2028 across Sumatra, Java, South Sulawesi, Nusa Tenggara, Maluku and Madura. For solar power plants, PLN acknowledges that development of rooftop solar PV power systems may help the government increase the proportion of renewable sources in the national energy mix to 23 per cent by the end of 2025.

In 2018 and early 2019, the government issued the following regulations in the energy sector:

  1. MEMR 10/2018, which is a second amendment to MEMR 10/2017, stipulating that under PPAs only natural disasters are considered force majeure events (under the former regulation, changes in laws and regulations were also considered force majeure events and the cost impact for IPPs was passed on to PLN as a tariff increase or, where a power plant could not be operated because of governmental force majeure (GFM) events, the IPP would be exempted from its obligations);9
  2. MEMR 53/2018, which is an amendment to MEMR 50/2017, adding liquid biofuels as a new type of renewable energy that may be purchased by PLN (see Section III.ii);10
  3. MEMR 49/2018, which sets out the procedure for the use of rooftop solar-panel power systems by PLN customers;11
  4. MEMR 39/2018, which aims to integrate the electricity sector into the online single submission (OSS) system and sets out several provisions addressing reclassification of licences, licensing procedure, supervision and transitional provision (see Section III.ii);12
  5. MEMR 37/2018, which sets out the procedure for securing geothermal licences.13

These new regulations have not addressed or removed the challenges posed to new IPPs as a result of the regulations issued in 2017, which introduced more government controls that may affect the bankability of power projects, including those using renewable energy as power sources (see Section III.ii).

III THE POLICY AND REGULATORY FRAMEWORK

i The policy background

To balance the government's ambition to achieve a 35,000MW electricity capacity while increasing the proportion of renewable sources in the energy mix, the government has introduced several incentives to IPPs that develop renewable energy sources, namely:

  1. a possible exemption by the Bank of Indonesia on the mandatory use of the rupiah for power plant projects as strategic infrastructure projects;14
  2. tax incentives provided for renewable energy power generation projects, including solar, wind, ocean and hydropower,15 and covering:
    • income tax deductions in an amount of 5 per cent per year for six years;
    • lower tariffs for income tax on dividends paid to non-resident taxpayers;
    • an extended tax loss carry-forward period of up to 10 years;
    • accelerated depreciation on tangible assets; and
    • accelerated amortisation of intangible assets;16
  3. IPPs may be granted a 2.5 per cent customs duty exemption for the import of capital goods used in energy development projects;17
  4. the possibility to acquire government guarantees for power plant projects,18 which is discussed further in Section IV; and
  5. the OSS system, which allows IPPs applying for an electricity supply business licence (IUPTL) to automatically obtain a conditional IUPTL after stating their commitment to fulfilling all the requirements set by the government (see Section III.ii).19

ii The regulatory framework

Electricity generation from renewable sources is mainly governed by the Energy Law, the Electricity Law,20 the Investment Law,21 and other sectoral and implementing regulations in the areas of geothermal, water, environment and forestry. In addition, IPPs and lenders must also comply with the applicable laws in relation to offshore loans and the mandatory use of the rupiah.

Electricity supply business licences

For IPPs to generate electricity and deliver it to PLN, they are required to obtain an IUPTL issued by the government to control the IPP's technical and financial capability, and fulfil environmental protection requirements.22 To simplify bureaucracy, IUPTL applications are pooled by and submitted to BKPM, which is currently operating the OSS system.23 The OSS system is an integrated licensing system for the processing of business licences for and on behalf of ministries, heads of agencies, governors, regents and mayors. MEMR 39/2018 reclassifies business licensing within the electricity sector into business licences, and commercial and operational licences. An IUPTL is considered a business licence and a certificate of operational worthiness constitutes a commercial and operational licence. To obtain an IUPTL and a certificate of operational worthiness, an IPP is only required to secure a Business Identity Number (NIB) through the OSS system. After securing the NIB, the IPP must submit its applications for licences through the OSS system. Licences will then be issued subject to the IPP meeting certain obligations. For an IUPTL, an IPP is required to submit documents proving it has met these obligations within 25 days of the issuance of the IUPTL. The documentary requirements include an electricity generation feasibility study, details of the project's proposed location, construction and operation schedules, and a PPA with PLN demonstrating the IPP's technical, financial and environmental protection capabilities.

Geothermal licences

The regulatory regime with respect to geothermal business activity is divided into two regulatory regimes: the old regulatory regime applicable prior to 2003 and the new regulatory regime applicable after 2003.

Prior to the issuance of the geothermal law in 2003, Pertamina was appointed by the government as the sole geothermal mining authority in Indonesia.24 Pertamina has the exclusive right to undertake geothermal business activities in work areas stipulated by the government by implementing its own operations or appointing a contractor pursuant to a joint operation contract (JOC). The JOC sits back-to-back with an energy sales contract (ESC) between the contractor as the deliverer of the geothermal energy or electricity produced, Pertamina as the seller and PLN as the buyer.

Following the enactment of the geothermal law in 2003,25 geothermal business activity is implemented by virtue of a geothermal licence issued by the government following tenders for work areas. Notwithstanding the foregoing, all JOCs and ESCs entered into prior to the enactment of the geothermal laws in 2003 remain valid until the end of their terms. In 2014, the government introduced a new law to better manage geothermal energy. The 2014 Geothermal Law established the distinction that geothermal activities are not part of mining activities.26 Consequently, geothermal activities in production forests and protected forest areas, which is where most of Indonesia's geothermal resources are concentrated, are permitted by obtaining a 'borrow-and-use' permit for forest areas (see Section III.ii, 'Forestry issues', below).

To undertake geothermal activities, the IPP must participate in a public bid process to obtain the rights to manage and operate a geothermal working area. Pursuant to MEMR 37/2018, geothermal working areas are required to be publicly offered through the implementation of a two-tiered tender mechanism: (1) determination of qualified tender participants according to various administrative, technical and financial criteria, and (2) appointment of the winning bidder, who will be granted the rights to manage and operate a geothermal working area and geothermal licence by the MEMR.

Procurement process for renewable energy PPAs

PLN in general is required to purchase electricity produced from renewable energy if the following requirements are met:

  1. the electricity generation is in line with PLN's local grid supply–demand balance;
  2. a feasibility and connectivity study has been conducted and verified by PLN;
  3. funding is available; and
  4. the pricing of the electricity is consistent with MEMR 50/2017 (see 'Electricity tariff for renewable power generation projects', below).

For renewable energy projects, PLN may appoint an IPP by way of direct selection or direct appointment, depending on the type of renewable energy in question, as follows.27

Power source Procurement process
Solar PV Direct selection based on a quota of capacity
Wind Direct selection based on a quota of capacity
Hydro Direct selection
Biomass Direct selection
Biogas Direct selection
Municipal waste Direct appointment
Geothermal Direct appointment
Ocean tidal or thermal Direct selection

The direct appointment process involves the appointment of one specific IPP, whereas direct selection involves the selection of more than one potential IPP. The MEMR's approval is required to initiate the direct appointment and direct selection processes.

Terms and conditions for PPAs

Until recently, the provision of PPAs was mostly based on business-to-business negotiations between an IPP and PLN. In 2017, however, the government issued MEMR 10/2017 to 'lock down' certain provisions of PPAs.28 This regulation may reduce the time required to negotiate the terms of a PPA, but at the same time may prejudice the general bankability of a PPA (i.e., through provisions regarding risk allocation, deemed capacity payment and GFM events).

MEMR 10/2017 is widely applicable to most types of power plant with the exception of intermittent power plants and certain renewable energy power plants, namely biogas, mini hydropower plants below 10MW and municipal waste-based power plants. Other renewable energy plants, such as geothermal, hydropower and biomass plants, remain subject to this regulation.

The key provisions regarding PPAs based on MEMR 10/2017 (including its subsequent amendments) and recent PPA precedent in the areas of renewable energy are as follows.

Key terms Remarks
Term Maximum of 30 years as of the commercial operation date (COD)
Scheme Build, own, operate and transfer (BOOT)
Deemed dispatch Limited only if PLN's grid is interrupted or unable to take the net electrical output because of PLN's default or negligence
GFM References to GFM are omitted from the most recent regulation (i.e., MEMR 10/2018)
Price review

Limited to changes of cost structures or changes to the technical details of a project. A change in cost structure is defined as a change in laws in the following areas:

  • regulations related to electricity prices;

  • taxation;

  • environment; and

  • regulations related to energy cost

PLN take-or-pay Limited to a certain period agreed by the parties and in consideration of the repayment term to an IPP's lenders
Penalty payable to PLN
  • Penalty for failure to meet the COD schedule
  • Penalty in respect of availability factor or capacity factor, and outage factor
  • Penalty in respect of IPP's failure to cope with PLN's megavolt ampere reactive interconnection system, except if the failure is due to a PLN request
  • Penalty for failure to maintain frequency required by the electrical grid system (grid code)
  • Penalty for failure to meet the required ramp rate
Remedy for PLN default or GFM PLN is required to purchase the project with consideration of the equity injected, the equity return rate, and senior debt and interest

Electricity tariff for renewable power generation projects

The general pricing guidelines under MEMR 50/201729 for renewable power generation projects are benchmarked against PLN's average electricity generation basic cost for the preceding year in the area where that project is to be located (the generating BPP).30 The electricity tariffs for renewable power generation projects are as follows.

Power sources Calculating the electricity tariff
Solar PV If the generating BPP is higher than the national average, then the tariff may not exceed 85 per cent of the generating BPP If the generating BPP is lower or the same as the national average, then the electricity purchase price will be determined by mutual agreement between the IPP and PLN on a business-to-business basis
Wind farm
Biomass
Biogas
Ocean tidal or thermal
Hydro If the generating BPP is higher than the national average, then the tariff under the PPA may not exceed the generating BPP If the BPP of the Sumatra, Java and Bali areas or the relevant generating BPP is lower than or the same as the national average, then the electricity purchase price will be determined by mutual agreement between the IPP and PLN on a business-to-business basis
Biofuel The electricity tariff must be based on agreements made between the relevant parties

The national average generating BPP for the period from 1 April 2019 to 31 March 2020 is US$7.86 cent/kWh.31

For obvious commercial reasons, PLN intends to lower or at least maintain the generating BPP. Benchmarking the electricity tariffs to the generating BPPs will affect investors' appetite to develop renewable power generation projects, because the low generating BPPs in most of the relevant areas are the result of Indonesia's principal reliance on coal-fired power plants, which are not comparable for the calculation of renewable power generation prices.

Supervision by the MEMR

Under MEMR 48/2017,32 the MEMR exercises supervisory authority over IPPs in several areas, including regarding share transfer restrictions, and notification requirements for changes in shareholdings and in the composition of the board of directors and board of commissioners of an IPP. The share transfer restrictions have created some concerns over the bankability IPP projects.

Environmental matters

Pursuant to the Environmental Law,33 business entities carrying out operational activities with significant impact on the environment are required to prepare an environmental impact assessment (AMDAL) that has to be approved as a prerequisite to secure an environmental permit. Where an AMDAL is not required, companies shall annually submit environmental management and environmental control effort reports to be approved by the authorised government institution.

Forestry issues

Indonesia's forests are arranged in three different classifications depending on their nature and functionality: production forests, protected forests and conservation forests. To use production and protected forests for commercial activities, including for the development of power plants, and the transmission and distribution of power supplies, a borrow-and-use permit must be obtained from the Minister of Environment and Forestry (MOEF) through the OSS system.34 The Forestry Law in general prohibits commercial activities within conservation forest areas to protect their pristine nature. However, geothermal activities may be implemented within nature-reserve forest areas after securing a geothermal environmental services utilisation permit issued by MOEF. There is currently no legal framework available to secure access to conservation forests and hunting parks.

Land matters

Under the Agrarian Law,35 the state holds ultimate title to all land in Indonesia. To construct a power plant (except in a forestry area), IPPs must first secure a land title in the form of a building right. Prior to acquiring any land title with a total area of more than 10,000 square metres, IPPs must obtain a location permit, as well as a permit to conduct land acquisition within the framework of investment and to use the land for operational activities, from the relevant authority, which depends on the location of the land.

To mitigate project risks due to land acquisition, the government provides a legal framework for the mandatory acquisition of land, including for electricity infrastructure development, if this is in the public interest.36 Such land acquisition is undertaken through the state budget. Accordingly, any land title subject to such acquisition must be transferred from the relevant landowner to the government, in this case to the National Land Agency (BPN). IPPs may be required to assist in the land acquisition process, and may have a use right over the land, but will not be entitled to register the land under their name.

In addition to land for power plants, IPPs may also be required to acquire a right of way for a transmission line to traverse the conductors from power plants to PLN interconnection points (where power plants and PLN's grid system are connected). Transmission lines and interconnection points are commonly referred to as 'special facilities'. Based on PPA precedents, IPPs are required to construct these special facilities and transfer their title to PLN on or before the COD. Thus, IPPs may not place any encumbrances over special facilities.

IV RENEWABLE ENERGY PROJECT DEVELOPMENT

i Project finance transaction structures

Transactional structure

Project financing for the development and implementation of renewable energy projects is generally similar to those for other infrastructure projects. A typical project finance in Indonesia is structured through a combination of the sponsor's equity and senior debt secured by the entire project's assets, including cash flow, with limited recourse against the project's sponsors. The project company shall be in the form of an Indonesian limited liability company established especially to own and manage the project, and in most cases it is a joint venture between a local sponsor and an international sponsor who participate in the construction and management of the project.

As mentioned above, the BOOT scheme must be used for energy projects. Aside from BOOT, the build, own, operate model has also been used in the past for several geothermal and hydro projects. The project company will then enter into an electricity offtake agreement in the form of a PPA with PLN. During the PPA period, the project company will own all project assets and enter into all agreements relating to the project. Under the BOOT scheme, following the expiry of the PPA, termination of the PPA due to PLN's default or GFM, the project company shall be transferred to PLN. In the case of termination because of PLN defaulting or GFM, PLN is required to purchase the project according to a predetermined price structure: see Section III.ii.

Project finance lenders in Indonesia are mainly international commercial banks, multilateral development agencies such as the Asian Development Bank (ADB), and export credit agencies (ECAs) such as Korean Exim Bank, China Exim Bank and JBIC. Typically, ECAs from the international sponsor's jurisdiction will be involved in providing financing, particularly if the international sponsor is also the project's contractor. It is difficult for local banks to provide project financing because of their limited liquidity for long-term debt and the lack of a derivatives market.

In the past 10 years, PT Sarana Multi Infrastruktur (Persero) (SMI), a state-owned infrastructure financing company, and PT Indonesia Infrastructure Finance (IIF), a joint venture between the government (through SMI), ADB, International Finance Corporation, Deutsche Investitions-und-Entwicklungsgesellschaft and Sumitomo-Mitsubishi Banking Corporation, have also been actively providing project financing for infrastructure projects in Indonesia, including renewable energy projects. Both SMI and IIF were established by the government as part of its efforts to accelerate infrastructure developments by providing domestic finance in the form of debt and equity. In 2015, SMI was mandated by the government to manage the state budget allocated specifically to fund geothermal projects.

Documentation

Project documents

Aside from the PPA, the key project documents in renewable energy projects typically include:

  1. engineering, procurement and construction (EPC) contracts;
  2. operation and maintenance (O&M) contracts;
  3. service agreements;
  4. government support agreements (if provided);
  5. sponsors' agreements;
  6. bank guarantees; and
  7. performance guarantees.

Construction contracts must be executed in compliance with the Construction Law,37 which, inter alia, sets out the minimum key terms of the contract and the mandatory use of the Indonesian language. Further, a tripartite converting agreement between an IPP, PLN and designated state-owned bank regulates the conversion of Indonesian rupiah payments for power purchased by PLN into US dollars at the prevailing exchange rate to comply with the mandatory use of the rupiah.

Finance documents

In a typical project financing, the financing documents include:

  1. facility agreements;
  2. sponsor support agreements;
  3. inter-creditor agreements;
  4. direct agreements;
  5. hedging agreements; and
  6. security documents.

These are discussed in further detail below.

For transactions that combine different types of financial institutions or granted facilities, a common terms agreement is typically executed to govern the principal terms of the financing, with a separate facility agreement for each creditor or facility. Indonesian law does not provide for any standard form of financing documents (save for security documents in certain cases), and they will generally be in such a form as is acceptable to the market.

Security in project finance transactions in Indonesia covers all the project's assets owned by the project company. Certain assets used as special facilities for the project will be transferred to, owned and operated by PLN once constructed, and thus will not be included in the security package. The security taken by the lenders is generally as follows:

  1. a pledge over the shares in the IPP project company;
  2. a mortgage over immovable assets (i.e., land and buildings);
  3. fiducia security over movable assets, receivables derived from the PPA, insurance and reinsurance claims, and buildings or fixtures;
  4. a pledge over the project's accounts; and
  5. conditional novation over project documents, including the PPA, EPC agreements, O&M agreements, bank guarantees and performance guarantees.

In addition to this security, a lender will also usually require a direct agreement to be executed, to allow it to have step-in rights into the main project documents, so that the lender may replace a project company in the documents when it exercises its rights thereunder.

Government support for the development of electricity infrastructure

Public–private partnerships

In early 2015, the government issued a regulation framework to boost public–private partnerships (PPPs) in the procurement and development of essential infrastructure projects in Indonesia.38 Under the new regulation, PR 38/2015, the number of sectors allowed to use PPPs has expanded from nine to 19, with the addition of, among others, renewable energy, water resources, waste management and energy conservation. Foreign and local investors are now allowed to participate in tender processes directly without establishing a company in Indonesia. Once an investor has been selected, it should establish a project company in Indonesia to implement and execute the PPP.

PR 38/2015 also addresses land procurement issues. PR 38/2015 makes land procurement the government's responsibility, and sets out a clearer procedure and timeline for investors. A tender process may not commence until the government obtains a site determination from the relevant provincial governor: thus, a project's site will be final from the outset. Under PR 38/2015, the government may now also place the land procurement process in the hands of a private sector partner to act on its behalf through a special power of attorney, which gives the private entity more room to operate.

Government guarantees for PPP projects have a key role to play in encouraging investment in the infrastructure sector. The government may now provide guarantees on political and sub-sovereign risks that can, for example, ensure the continuity of a PPP project despite a change in government, and assure the deliverables made by a regional public sector authority. The possibility of government support in the form of tax incentives and fiscal contributions should also help to improve the attractiveness of PPP projects, thereby potentially resulting in more competitive bids from the private sector. Partial financing and viability support for PPP projects of social interest and public benefit in relation to the construction of new infrastructure, or the operation and maintenance of infrastructure, should also help boost private investor interest.

PR 38/2015 provides greater assurances with respect to land procurement, and greater government support to make the sectors using PPPs more attractive to investors. However, very few renewable energy projects have been funded through PPPs to date. Pursuant to the 2018 PPP Handbook, 15 PPP projects were ready to be offered in 2018, but none of them were renewable energy projects.39

Business viability guarantee from the government for electricity infrastructure

In addition to government support and government guarantees for PPP projects, the government may issue a guarantee to investors for power generation projects.40 The government guarantee may include a business viability guarantee letter (BVGL).

BVGLs are granted to IPPs to secure PLN's financial obligations under a PPA, which consist of the payment of the electricity price and other payment obligations. PLN's financial obligation shall be limited to other payment obligations arising from the occurrence of political risks, such as government actions and inaction or a change in law, which must be borne by PLN, or any other PLN non-remediable event as stipulated in the PPA. BVGLs will be signed by the MOF and issued to IPPs with a copy going to PLN.

We understand from previous experience that the obligations of the government under a BVGL constitute obligations under Article 1316 of the Indonesian Civil Code. The clause is essentially an indemnity provision, allowing the indemnified party to claim for the indemnified amount directly from the indemnifying party. Thus, an IPP could make a claim directly against the government under a BVGL. However, MOF 130/2016 requires the payment to go to PLN first, rather than directly to an IPP. After PLN receives the amount, PLN should pay that amount to the relevant IPP; however, this system has yet to be implemented.

ii Distributed and residential renewable energy

To achieve the government's commitment of 23 per cent utilisation of renewable energy, the MEMR encourages domestic households to adopt rooftop solar PV power systems. PLN customers who are interested in using solar-panel systems are required to follow the procedure set out under MEMR 49/2018: (1) application has to be made for the installation of a solar-panel system to the general manager of PLN, with copies to the Directorate General of Electricity and the Directorate General of New and Renewable Energy; (2) PLN then assesses the application; and (3) after approval is granted by PLN, customers may commence installation of the solar-panel system. Note that the installation of rooftop solar systems should only be undertaken by certified companies, which are those companies that have fulfilled the technical requirements set out by the MEMR and that have obtained (1) a business certificate from the Business Entity Certification Agency and (2) an Electricity Support Services Business Licence from the Directorate General of Electricity of the MEMR.41

If the amount of electricity exported from the customer's solar-panel system is greater than the amount of electricity imported in the current month, the excess shall be collected and calculated as a deduction from the customer's electricity bill for the following month. The installation of rooftop solar PV equipment is also subject to the local content requirement (see Section V).

V RENEWABLE ENERGY MANUFACTURING

The Electricity Law requires IPPs to prioritise the use of domestic products in developing power generation projects, including renewable energy projects. The government requires IPPs to comply with minimum local content requirements (for goods and services) for the development of electricity infrastructure.42 Failure to comply with these local content requirements may result in administrative and financial sanctions.

VI CONCLUSIONS AND OUTLOOK

In spite of the recent correction to Indonesia's energy outlook (see Section II), the renewable energy sector's share of the energy mix is still expected to grow. However, the government's latest regulation spree in 2017 may prove counterproductive in relation to the promotion of new renewable projects; for example, by limiting electricity tariffs to the BPP, the imbalance in risk allocation in PPAs between PLN and IPPs, and the stringent supervision of the MEMR in the energy sector.

On the other hand, in 2018 the government launched the OSS system with a view to accelerating licence processing. The OSS system will be able to process, in one place and very expeditiously, business licences across almost all sectors. The new licensing procedure bypasses regional bureaucracies and ultimately simplifies processing requirements. The fulfilment of the relevant licensing requirements is to be undertaken after businesses have secured their business licences.


Footnotes

1 Kanya Satwika is a partner, Tracy Tania and M Insan Pratama are senior associates and Theodora P Saputri is an associate at Assegaf Hamzah & Partners.

2 Minister of Energy and Mineral Resources Decree No. 39 K/20/MEM/2019 on the Ratification of PT PLN Electricity Generation Plan 2019–2028 (the PLN Electricity Plan 2019).

3 Presidential Regulation No. 4 of 2016 on Acceleration of the Development of Electricity Infrastructure (PR 4/2016).

4 PLN Electricity Plan 2019, page III-7.

5 National Energy Master Plan (RUEN) for 2015 to 2050 as stipulated in Presidential Regulation No. 22 of 2017, page 20.

7 RUEN, page 20.

8 RUEN, page 13.

9 MEMR Regulation No. 10 of 2018 concerning the second Amendment to Regulation of the Minister of Energy and Mineral Resources No. 10 of 2017 on Main Provisions for Power-Purchase Agreements.

10 MEMR Regulation No. 53 of 2018 concerning Amendment to Regulation of the Minister of Energy and Mineral Resources No. 50 of 2017 on the Utilisation of Renewable-Energy Resources for the Production of Electricity.

11 MEMR Regulation No. 49 of 2018 concerning the Utilisation of Rooftop Solar Power Systems by Customers of PT PLN (Persero).

12 MEMR Regulation No. 39 of 2018 concerning Electronically Integrated Business Licensing Services for the Electricity Sector (MEMR 39/2018).

13 MEMR Regulation No. 37 of 2018 concerning the Offering of Geothermal Working Areas, the Issuance of Geothermal Licences and the Assignment of Geothermal Businesses.

14 Regulation of Bank Indonesia No. 17/3/PBI/2015 regarding Mandatory Use of Rupiah in the Republic of Indonesia.

15 Government Regulation No. 18 of 2015 concerning Income Tax Facilities for Capital Investment in Certain Business Sectors and/or Certain Regions (GR 18/2015), Schedule I Point 60.

16 GR 18/2015, Article 2(2).

17 BKPM 13/2017, Article 60.

18 Minister of Finance Regulation No. 130/PMK.08/2016 on the Procedure of Granting of Government Guarantee for the Acceleration of Electricity Infrastructure Development (MOF 130/2016).

19 MEMR 39/2018.

20 Law No. 30 of 2009 concerning Electricity.

21 Law No. 25 of 2007 on Investment.

22 Government Regulation No. 14 of 2012 on Electricity Generation Business.

23 MEMR Regulation No. 35 of 2014 on the Delegation of Authority to Issue Licences in Electricity Sectors for the Implementation of One-Stop Integrated Services, as last amended by Regulation of Minister of Energy and Mineral Resources No. 14 of 2017.

24 Perusahaan Pertambahan Minyak dan Gas Bumi Negara now PT Pertamina (Persero) (Pertamina). Pertamina's geothermal business and role under the old geothermal regimes was then assigned to its wholly owned subsidiary, PT Pertamina Geothermal Energy.

25 Law No. 21 of 2003 as amended by Law No. 21 of 2014 on Geothermal (the Geothermal Law) and Government Regulation No. 59 of 2007 regarding geothermal business activity (GR 29/2007).

26 The Geothermal Law.

27 MEMR Regulation No. 001 of 2006 on the Procedure to Purchase Electricity and/or to Lease Electricity Grid for Public Interest Purposes, as amended by MEMR Regulation No. 004 of 2007. Specifically, for renewable energy, the procurement process may be carried out by way of direct selection or direct appointment as provided under MEMR Regulation No. 50 of 2017 on the Use of Renewable Energy for Electricity Supply, as amended by MEMR Regulation No. 53 of 2018 (MEMR 50/2017).

28 MEMR Regulation No. 10 of 2017 concerning Principles of Power Purchase Agreement, as amended by MEMR Regulation No. 49 of 2017 and MEMR Regulation No. 10 of 2018.

29 MEMR 50/2017.

30 Biaya Pokok Penyediaan Pembangkitan.

31 MEMR Decree No. 55 K/20/MEM/2019 concerning PLN's Average Electricity Generation Basic Cost for the Year 2018.

32 MEMR Regulation No. 48 of 2017 concerning Supervision in the Energy and Mineral Resources Sector.

33 Law No. 32 of 2009 regarding Environmental Protection and Management and Government Regulation No. 27 of 2012 regarding Environmental Permits.

34 Law No. 41 of 1999 regarding Forestry, as amended by Law No. 19 of 2004 and partly revoked by Law No. 18 of 2013), MOEF Regulation No. P.50/Menlhk/Setjen/Kum.1/6/2016, as revoked by MOEF Regulation No. P.27/Menlhk/Setjen/Kum.1/7/2018.

35 Law No. 5 of 1960 on the Principles of Agrarian.

36 Law No. 2 of 2012 on Land Procurement for Public Interest Development and Presidential Regulation No. 71 of 2012 on the Implementation of Land Procurement for Public Interest Development, as amended from time to time).

37 Law No. 2 of 2017 on Construction Services.

38 The President issued Regulation No. 38 (PR 38/2015) revoking its predecessor, Regulation No. 13 of 2010 on Cooperation between the Government and Business Entities in Infrastructure Provision.

40 MOF 130/2016.

41 MEMR Regulation No. 35 of 2013 on Procedures on Electricity Business Licensing, as amended by MEMR Regulation No. 12 of 2016.

42 Minister of Industry Regulation No. 54 of 2012 on the Local Content for Electricity Infrastructure (as amended by Regulation No. 5 of 2017).