INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina Muryanti, Adya Sepasthika and Kenny Poltak, ABNR Counsellors at Law
The government is also planning to amend or issue new government regulation on electricity supply busi- ness. However, please note that as of the date of this publication, the proposed draft regulations have not yet been enacted. 1.8 Unique Aspects of the Power Industry The power industry in Indonesia is heavily regulated by the government, although the participation of private investors is allowed and encouraged by the govern- ment. Nevertheless, the power industry in Indonesia is still inherently under the monopoly of PLN. The wholesale electricity market in Indonesia is still monopolised by PLN, although private-owned com- panies can directly sell electricity to end-consumers subject to the requirements of the regulations. There are several private power utility (PPU) companies, or integrated power companies, in Indonesia that sell electricity to end-consumers in an industrial area or parks (such as PT Cikarang Listrindo and PT Bekasi Power). The wholesale price of electricity is determined by the central government with approval from the House of Representatives. The wholesale electricity mar- ket in Indonesia is based on the energy market. The main supplier of electricity to end-consumers is PLN, although there are certain cases, such as industrial parks, where the electricity is supplied by PPUs. The electricity tariff charged to end-consumers is determined by the central government and may vary between regions. 2.2 Electricity Imports and Exports The import and export of electricity to/from other jurisdictions is permitted. Under the current Electric- ity Law, the import of electricity may depend on the following conditions: 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market • there is a shortage of electricity supply in local areas that cannot be met by PLN or private power companies in Indonesia;
• it is only to support and meet local electricity needs; • it is not detrimental to the state and national inter - est (ie, in terms of sovereignty, security and eco- nomic development); • it is needed to improve the quality and reliability of local power supply; • it does not disregard the development of domestic power supply capability; and • it does not lead to dependence on power procured from abroad. Electricity can be exported if: • there is no shortage of electricity in the local area; • the sale is not subsidised; and • it does not compromise the quality and reliability of the local or domestic power supply. The export/import of electricity can only be done by the holder of an electricity supply business licence, with a separate or additional electricity business licence required for the export/import of electricity from MEMR. The (export/import) electricity supply business licence is valid for five years and can be extended. As noted in 1.7 Announcements Regarding New Poli- cies , the proposed third amendment to the Electricity Law (in the form of the draft bill dated 12 June 2025) seeks to refine the regulatory framework for cross- border electricity trade. The key proposed changes include: • expanding the domestic supply threshold for electricity export from “local area” to “all regions of Indonesia”; • introducing new clean energy considerations, requiring imported electricity to be sourced from clean energy; and • imposing reporting obligations and non-tax state revenue on cross border electricity trade. 2.3 Supply Mix of Electricity The coal-fired power plant is still dominant in the sup- ply mix of electricity for the entire market in Indonesia. The main types of renewable energy projects devel- oped in Indonesia are hydropower, geothermal, solar
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