02 Mar 2018
Energy & Mineral Resources Ministry Comes Good on Promise to Revoke Regulations

As we reported in our Client Update published on 14 February 2018, the Ministry of Energy and Mineral Resources (“MEMR”) recently announced the revocation of 32 regulations in furtherance of the government’s efforts to reduce the regulatory burden on business. However, as we also pointed out at the time, it was not clear which of these regulations had in fact been revoked prior to the publication of the release, and which would be revoked at some point in the future. The situation in this regard has now been clarified with the issuance of four new revoking regulations as part of what might be seen as a “big-bang” reform process. However, there has been some criticism to the effect that many of the revoked regulations were in fact already obsolete or in abeyance, or of little overall significance to investors. Despite such criticism, we believe that any lightening of the regulatory burden on business and/or thinning out of the country’s bulging statute books should be warmly welcomed.

The four revoking regulations referred to above are:

1. MEMR Regulation No. 6 of 2018 on the revocation of regulations in the oil and gas sector (which revokes 11 regulations);
2. MEMR Regulation No. 7 of 2018 on the revocation of regulations in the electricity sector (which revokes four regulations);
3. MEMR Regulation No. 8 of 2018 on the revocation of regulations in the minerals and coal sector (which revokes seven regulations),
4. MEMR Regulation No. 9 of 2018 on the revocation of regulations in the new and renewable energy, and energy conservation sectors (which revokes five regulations).

Among the regulations revoked by ESDM Regulation No. 9 of 2018 are the three that were the subject of our earlier update, namely:

1. MEMR Regulation No. 19 of 2015; on the Purchase of Electricity by PT PLN from Hydro Power Plants with a Capacity of Up To 10 MW;
2. MEMR Regulation No. 19 of 2016 on the Purchase of Electricity by PT PLN from Photovoltaic Solar Power Plants (“MEMR Regulation 19/2016”); and
3. MEMR Regulation No. 21 of 2016 on the Purchase of Electricity by PT PLN from Biomass and Biogas Power Plants (“MEMR Regulation 21/2016”).

Such a wholesale revocation of regulations is unusual in the Indonesian context and appears to demonstrate commitment on the part of the MEMR to the government’s oft-stated goal of enhancing the country’s competitiveness. With Indonesia coming under increasing pressure from regional trade rivals such as Vietnam, it is to be hoped that this commitment will be maintained going ahead.

The full list of MEMR regulations that have been revoked by the four new regulations is as follows:

Oil and Gas Sector (regulations revoked by MEMR Regulation No. 6 of 2018)

1. Regulation No. 02/P/M/PERTAMB/1975 on Occupational Safety at Transmission Pipelines and Support Facilities for Oil and Gas Transportation Outside Oil and Gas Extraction Zones
2. Decree No. 1454 K/30/MEM/2000 on Technical Guidelines for the Performance of Governmental Duties in the Oil and Gas Sector
3. Regulation No. 0008/2005 on Marginal Oil Field Development Incentives
4. Regulation No. 0044/2005 on the Supply and Distribution of Certain Types of Hydrocarbon-based Fuels
5. Regulation No. 026/2006 on the Supply of Hydrocarbon-based Fuels for Strengthening the Shipping Industry
6. Regulation No. 02/2008 on the Fulfillment of Domestic Fuel and Natural Gas Supply Obligations by Production Sharing Contractors
7. Regulation No. 22/2008 on Cost Categories in the Upstream Oil and Gas Industry that are Non-Recoverable by Production Sharing Contractors
8. Regulation No. 06/2010 on Policy Guidelines for Increasing Oil and Gas Production
9. Regulation No. 31/2013 on Provisions and Procedures Governing the Employment of Expatriate Manpower and the Development of Indonesian Human Resources in the Oil and Gas Industry.
10. Regulation No. 22/2016 on the Development of Small-Scale Oil Refineries
11. Regulation No. 51/2017 on Guidelines and Management Procedures for the Administration of State Assets in Upstream Oil and Gas Operations

Electricity Sector (regulations revoked by MEMR Regulation No. 7 of 2018)

1. Regulation No. 02.P/451/M.PE/1991 on the Relationship Between the Electricity Business Authority Holder and the Holders of Electricity Business Permits for Public and Community Interests
2. Regulation No. 03.P/451/M.PE/1991 on Electricity Connection Requirements
3. Regulation No. 33/2008 on the Selling Price for Electricity Supplied by PT Pelayanan Listrik Nasional Batam
4. Regulation No. 04/2012 on Prices for Electricity Purchased by PT PLN (Persero) from Small- and Medium-Scale Renewable Energy Power Plants or Excess Electricity

Minerals & Coal Sector (regulations revoked by MEMR Regulation No. 8 of 2018)

1. Decree No. 2555.K/201/M.PE/1993 on the Inspection of Mines in the GeneralMining Sector
2. Decree No. 103.K/008/M.PE/1994 on Supervision of the Implementation ofEnvironmentalManagement Plans andEnvironmentMonitoring Plans in the MiningandEnergySectors
3. Decree No. 620.K/008/M.PE/1994 on the Ministry of Mines and Energy’s Central Environmental ImpactAnalysis Commission
4. Decree No. 2202.K/201/M.PE/1994 on the Provision of PreliminaryInvestigationPermits in the Context of Foreign Investment (PMA) and Domestic Investment (PMDN) in the GeneralMining Sector
5. Decree No. 134.K/201/M.PE/1996 on the Use of Maps, Explanations on Boundaries and Areas of Mining Concessions, Contract of Work Areas and Coal Contract of Work Areas in the General Mining Sector
6. Decree No. 135.K/201/M.PE/1996 on Proofs of Commitment and Capacity on the Part of Mining Concession, Contract of Work and Coal Contract of Work Applicants
7. Decree No. 1614 of 2004 on Guidelinesfor the Processing of Contract of Work and Coal Contract of Work Applications in the ForeignDirect Investment Context

New & Renewable Energy, and Energy Conservation (regulations revoked by MEMR Regulation No. 9 of 2018)

1. Regulation No. 13 of 2012 on Electrical Energy Efficiency
2. Regulation No. 19 of 2015 on Purchases of Electricity by PT PLN from Hydro Power Plants with a Capacity of Up To 10 MW
3. Regulation No. 14 of 2016 on Establishment ofEnergy ConservationServices Companies
4. Regulation No. 19 of 2016 on Purchases of Electricity by PT PLN from Photovoltaic Solar Power Plants
5. Regulation No. 21 of 2016 on Purchases of Electricity by PT PLN from Biomass and Biogas Power Plants

(By: Giffy Pardede: gpardede@abnrlaw.comand Serafina Muryanti H. P. : smuryanti@abnrlaw.com)