INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina (Fina) Muryanti and Adya Sepasthika, ABNR Counsellors at Law
electricity supply business licence is valid for five years and can be extended. 2.3 Supply Mix of Electricity The coal-fired power plant is still dominant in the supply mix of electricity for the entire market in Indonesia. The supply from renewable energy power plants was still relatively low up to Octo- ber 2024 – ie, 8,684 megawatts, representing 11.5% of the overall power generation mix and falling short of the 12.4% target of the govern- ment, set with a view to realising a proportion of 23% in 2025. 2.4 Market Concentration Limits There is no regulation regarding market concen- tration limits. However, the electricity market in Indonesia is generally controlled by the govern- ment, with PLN as the state-owned enterprise being given the mandate (and thus priority) to ensure the supply of electricity meets the public requirement. Consequently, the electricity mar- ket is monopolised and, to a certain extent, con- trolled by PLN. 2.5 Surveillance to Detect Anti- Competitive Behaviour Although private-owned companies are allowed to participate in the power market in Indonesia, the market itself is heavily regulated by the gov- ernment and thus is not as free or competitive as in other jurisdictions. Market surveillance in Indonesia is conducted by the Indonesia Com- petition Commission ( Komisi Pengawas Persain- gan Usaha or the KPPU). The KPPU’s powers include conducting assessments of the activi- ties and/or actions of businesses that may result in monopolistic practices and/or unfair busi- ness competition, conducting investigations or examinations of cases of alleged monopolistic practices and/or unfair business competition and conducting interviews for the purpose of
obtaining evidence. KPPU also has the author- ity to impose administrative sanctions on busi- ness actors that violate anti-competition law or engage in anti-competitive behaviour.
3. Generation Facilities 3.1 Constructing and Operating Generation Facilities
The construction of generation facilities is sub- ject to the Electricity Law, the “Construction Law” (Law No 2 of 2017 as amended by Law 6/2023) and the implementing regulations – ie, Government Regulation No 25 of 2021 on the Implementation of Energy and Mineral Sector, Government Regulation No 62 of 2012 on the Electricity Supporting Services Business and Government Regulation No 22 of 2020 on Con- struction Services as amended by Government Regulation 14 of 2021. The operation of genera- tion facilities is subject to the Electricity Law and the implementing regulation – ie, Government Regulation No 62 of 2012 on the Electricity Sup- porting Services Business. To construct generation facilities, the contractor must have (i) a business entity certificate from the Ministry of Public Works and the MEMR, and (ii) an electricity-supporting business licence. If the generation facilities are operated by a third-party operations and maintenance (O&M) contractor or company instead of the independent power producer (IPP)/asset owner, the O&M contractor must have (i) an electricity-supporting business licence and (ii) a business entity certificate. 3.2 Obtaining Approvals to Construct and Operate Generation Facilities In addition to the licences associated with the construction contractor, to construct a genera- tion facility, the project company/IPP/owner of
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