25 Mar 2015
NEW MEMR REGULATION ON DIRECT ELECTION AND DIRECT APPOINTMENT OF IPP BY PT PLN

To accelerate power plants development by PT Perusahaan Listrik Negara (Persero) (“PLN”), on 12 January 2015 the Minister of Energy and Mineral Resources (“MEMR”) issued Regulation Number 03 of 2015 on Procedures for the Purchase of Electricity and Benchmark Prices for the Purchase of Electricity from Mine Mouth Steam Power Plant (PLTU Mulut Tambang), Coal Steam Power Plant (PLTU Batubara), Gas Power Plant/Gas Machine Power Plant (PLTG/PLTMG), and Water Power Plant (PLTA) by PT Perusahaan Listrik Negara (Persero) through Direct Election and Direct Appointment (“Regulation No. 3/2015”).

As the title indicated, Regulation No. 3/2015 allows PLN to purchase electricity power from independent power producers (“IPP”) through direct election and direct appointment, by fulfilling the criteria stipulated under this regulation. Based on Regulation No. 3/2015, PLN is required to announce its electricity power purchase plans and to carry out them out through an electronic procurement system. The procedures for the purchase of electricity through direct election and direct appointment are to be further regulated by the Board of Directors of PLN.

Regulation No. 3/2015 also provides benchmark prices for the purchase of electricity power. IPPs may sell electricity power to PLN without obtaining approval from MEMR, provided that the electricity power price is still below the highest benchmark price set up by MEMR. For certain areas, PLN may purchase electricity power at a price which exceeds the highest benchmark price based on its own estimation and approval from MEMR. (by: Kartika Budianti Lestari & Sevril Renishanti)