INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina (Fina) Muryanti and Adya Sepasthika, ABNR Counsellors at Law
ABNR Counsellors at Law Graha CIMB Niaga 24th Floor Jl Jenderal Sudirman Kav 58 Jakarta 12190 Indonesia Tel: +62 212 505 125
Email: Info@abnrlaw.com Web: www.abnrlaw.com
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry The power industry consists of (i) generation, (ii) transmission, (iii) distribution, (iv) sale and (v) integrated activities. The electricity regulations generally allow for bundled or unbundled activities. However, it is to be noted that Constitutional Court Decision No 111/PUU-XIII/2015, dated 14 December 2016 (the “Constitutional Court Decision”), ruled that the concept of “unbundling” under the Electricity Law is conditionally unconstitutional if: • it results in the loss of the government’s con- trol over electricity supply and therefore con- tradicts the principle that electricity should be under the government’s control; or • it is interpreted as the government relinquish- ing control over the power sector in violation of the principle under the Constitution where the government must control electricity or power supply in Indonesia. In practice, the Constitutional Court Decision has not affected the power industry since the
government, through the Minister of Energy and Mineral Resources (MEMR), still controls the industry by way of issuing approvals, permits or licences to conduct power business activities, including control over the electricity purchase price and tariff to end-consumers. In current practice, the power industry in Indonesia con- sists of the following: • unbundled activities for generation, transmis- sion, distribution and sale, with mostly private investor-owned companies engaging in pow- er generation activities with PT Perusahaan Listrik Negara (PLN; a state-owned enterprise or Persero ) as the offtaker; and • bundled activities to accomplish all of the above electricity supply operations (power generation, transmission, distribution and sale) by a single company. Although the regu- lations allow for bundled activities covering only two activities, such as distribution and sale, this has never been seen in Indonesia. The market players in the power industry are a combination of state-owned enterprises (includ- ing subsidiaries) and private, investor-owned companies.
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