Following the press conference last February, the Indonesian Ministry of Energy and Mineral Resources (“MEMR”) has taken several progressing steps to improve investment climate in Indonesia, particularly in energy sectors.
In Oil and Gas Sector, MEMR has issued the Minister of Energy and Mineral Resources Regulation No. 6 of 2018, which revokes 11 existing MEMR Regulations considered to hurdle investment in energy sectors. For example, with the revocation of MEMR Regulation No. 31 of 2013 regarding the Provisions and Procedure of the Use of Foreign Workers in the Oil and Gas Business Activity, it is expected that the procedures to engage foreign workers in Indonesia in the Oil and Gas activity would be simplified.
Furthermore, on 1 March 2018, the Directorate General of Oil and Gas announces the simplification of 7 additional Oil and Gas existing regulations, covering among others:
- issuance of MEMR Regulation No. 13 of 2018 regarding the Procurement and the Distribution of Gas Fuel and Liquefied Petroleum Gas , which combine the previous MEMR Regulation No. 16 of 2011 regarding the Distribution Activity of Oil Fuel (Bahan Bakar Minyak of “BBM”) and MEMR Regulation No. 26 of 2009 regarding the Distribution of Liquified Petroleum Gas into a single regulation;
- issuance of MEMR Regulation No. 14 of 2018 regarding the Supporting Business Activity of Oil and Gas, which revokes MEMR Regulation No. 27 of 2008 regarding the Supporting Business Activity of Oil and Gas; and
- issuance of MEMR Regulation No. 15 of 2018 on Post-Upstream Oil and Gas Operation Activity, which revokes MEMR Regulation No. 1 of 2011 on the Technical Guidance on the Demolition of the Offshore Installation.
The daily operator (pelaksana tugas or “PLT”) of the Directorate General of Oil and Gas explains that the simplification of the remaining regulations are still in the process of finalization, but expected to complete not in a distant future. The details of the new MEMR regulations are as follow:
- MEMR Regulation No. 15 of 2018 on Post-Upstream Oil and Gas Operation Activity.
- MEMR Regulation No. 13 of 2018 on Procurement and the Distribution of Gas Fuel and Liquefied Petroleum Gas.
- Draft of Minister Regulation (“DMR”) on the Import of Operating Goods in Upstream Oil and Gas Business Activities.
- DMR on the Determination of Allocation, Utilization and Pricing of Natural Gas.
- DMR on the Safety Inspection of Installation and Equipment of Oil and Gas Business Activities.
- MEMR Regulation No. 14 of 2018 on the Oil and Gas Supporting Business Activities.
One example of simplification is the revocation of the requirement for Registration Letter (Surat Keterangan Terdaftar or “SKT”) under the previous MEMR Regulation No. 27 of 2008. Also, MEMR now introduces online application system for Letter of Capacity of Supporting Business Activity (Surat Kemampuan Usaha Penunjang or often referred to as “SKUP”).
In the Minerals and Coal sector, MEMR has issued the Minister of Energy and Mineral Resources Regulation No. 8 of 2018 revoking 7 existing minerals and coal regulations and further issued MEMR Regulation No. 11 of 2018, effective as per 21 February 2018 which provides guidance on procedures to grant mining area, mining business license, rights and obligations as well as restriction of the holder of the mining business license. The latter revokes the following regulations:
- Minister of Energy and Mineral Resource Decree No. 1453.K/29/MEM/2000 regarding Technical Guidelines for Implementation of Government Duties in the Sector of General Mining;
- Minister of Energy and Mineral Resource Regulation No. 12 of 2011 regarding Procedure for Stipulation of Mining Area (Wilayah Usaha Pertambangan or “WUP”) and Information System of Mineral and Coal Mining Areas;
- Minister of Energy and Mineral Resource Regulation No. 28 of 2013 regarding Procedure for Auction of Mining Business License Area (Wilayah Izin Usaha Pertambangan or “WIUP”) and Special Mining Business License Area (Wilayah Izin Usaha Pertambangan Khusus or “WIUPK”) on Mining Business Activities of Metals and Coal Minerals;
- Minister of Energy and Mineral Resource Regulation No. 25 of 2016 regarding Amendment to Minister of Energy and Mineral Resource Regulation No. 12 of 011;
- Minister of Energy and Mineral Resource Regulation No. 15 of 2017 regarding Procedure of Granting the IUPK Production Operation as the Continuance of the Contract of Work (Kontrak Karya or “KK”) and Coal Contract of Work (Perjanjian Karya Pengusahaan Batubara or “PKP2B”) Operation;
- Minister of Energy and Mineral Resource Regulation No. 34 or 2017 regarding Licensing in the Sector of Mineral and Coal Mining;
- Regulations of the Directorate General of Minerals and Coal No. 714.K/30/DJB/2014 dated 12 August 2014 regarding the Guidance and Requirements of the Granting of Coal Exporter Recommendation;
- Regulations of the Directorate General of Minerals and Coal No. 841.K/30/DJB/2015 dated 31 July 2015 regarding the Guidance and Requirements of the Granting of Coal Exporter Recommendation and Approval of the Export of Pure Lead Bar.
Finally, in the Electric Power and Renewable Energy sector, the MEMR issues the following regulations:
- MEMR No. 7 of 2018, revoking 4 existing regulations in the Electric Power Sectors; and
- MEMR Regulation No. 9 of 2018, revoking 5 existing regulations in the New Renewable Energy and Energy Conservation sector.
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