INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Serafina Muryanti, Adya Sepasthika and Kenny Poltak, ABNR Counsellors at Law
4.2 Obtaining Approvals to Construct and Operate Transmission Lines and Associated Facilities The contractor that builds or constructs, and the O&M contractor that operates, the transmission lines and associated facilities must obtain the licences set out in 3.1 Constructing and Operating Generation Facili- ties . The company or the owner of the asset must also obtain: • an Approval of Conformity of Space Utilisation Activities permit; • an Environment Approval; and • a Building Approval permit. Please see 4.1 Constructing and Operating Trans- mission Lines and Associated Facilities regarding the process of obtaining the Environmental Approval. 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities Please refer to 3.3 Approvals to Construct and Oper- ate Generation Facilities , as the same principles are also applicable to the construction and operation of transmission lines and associated facilities. The MEMR also issued technical regulations on transmis- sion lines’ standard and associated facilities. Where transmission lines and associated facilities are developed in connection with a power project to be interconnected with PLN’s electricity system, such facilities must comply with the applicable technical standards, grid code, electricity safety requirements and PLN’s interconnection requirements. Under the previous regulatory framework, IPP projects were commonly structured under a build, own, oper- ate, transfer (BOOT) scheme. However, for renewable energy projects, MEMR 5/2025 now provides that the development scheme is generally build, own, operate (BOO), while allowing other development schemes, including BOOT, where agreed by the parties and appropriate for the relevant project. Accordingly, the transfer of transmission lines and associated facilities to PLN is no longer a mandatory regulatory require- ment and instead depends on the applicable contrac- tual arrangements between the parties.
4.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Transmission Lines and Associated Facilities Please refer to 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities . In addition to compensation for the acquisition of land for tower installation, the proponent must also provide right-of-way compen- sation to landowners whose land is traversed by the transmission cables. The compensation is regulated under MEMR Regulation No 13 of 2025 concerning Clear Space for Electric Power Transmission Net- works and Compensation for Land, Buildings and/or Plants Located Below Clear Space for Electric Power Transmission Networks. The MEMR regulation sets out the formula to calculate the compensation for buildings, land and/or plants. The calculation and determination of the compen- sation amount must be done by the Independent Appraisal Agency. The right-of-way compensation is to be paid once to the landowner. 4.5 Monopoly Rights to Provide Transmission Services Transmission lines in Indonesia are mostly owned and operated by PLN; only a handful of transmission lines are owned and operated by private entities such as PT Cikarang Listrindo or captive power plants. It is pos- sible for a private entity to own and operate transmis- sion lines subject to obtaining a Stipulation of Busi- ness Area permit (which demarcates the specific area in which the transmission company can construct and operate the transmission lines and provide transmis- sion services) from the MEMR. Once it has received the Stipulation of Business Area permit for transmission services, the transmission entity has an exclusive right to construct and oper- ate transmission facilities within a defined territory under the permit, and competitors are prohibited from building transmission lines in that territory and offering transmission services because – under the regulation – there cannot be more than one holder of a Stipula- tion of Business Area permit covering the same area.
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