News & Announcements

W&P Newsletter – Simplifications and Regulatory Improvement in Energy and Mining Sectors

February 16, 2018 News

To simplify the bureaucracy and improve the investment climate in Indonesia, the Indonesian Ministry of Energy and Mineral Resources (MEMR) issued a press release on the 5th of February, 2018, which announced the plan to revoke 32 energy regulations consisting of: 11 regulations from the oil and gas sector, 7 regulations from the mineral and coal sector, 7 regulations from the renewable energy sector, 4 regulations from the electricity sector, and ultimately, 3 regulations from the special task force for upstream oil and gas business activity (SKK Migas). Subsequently, on the 12th of February, 2017, the MEMR issued another press release announcing the proposal to combine 51 energy regulations into 29 regulations, with the aim to provide ease for investment.

Once effective, the plan is expected to directly impact the mining and energy business activities and to provide flexibilities in certain areas, including on the obligations to deliver 25% oil and gas production for domestic needs (as per the Minister of Energy and Mineral Resource Regulation No. 02/2008), and the simplification on the procedures to import goods upstream (as per the Minister of Energy and Mineral Resources Regulation No. 037/2006). In the Minerals and Coal Sector, the revocation of regulations related to application of KP, KK, and PKP2B should provide more consistency on mining activities, particularly in relation to the Mining Business License (Izin Usaha Pertambangan).

Practitioners are now anticipating the issuance of the implementing regulations with great enthusiasm.

The details of the 32 revoked regulations listed in the press release on the 5th of February, 2018 are listed below. For further information on the above, W&P’s energy team Miriam Andreta (Mandreta@wplaws.com) and Sinta Dwi Cestakarani (Scestakarani@wplaws.com) are happy to answer any question.

Oil and Gas 

  1. Minister of Energy and Mineral Resource Regulation No. 02/1975 concerning the Work Safety at Distribution Pipelines and Fitting Facilities to Transport Oil and Gas Outside the Oil and Gas Mining Working Area;
  2. Minister of Energy and Mineral Resource Decree No. 1454 K/30/MEM/2000 concerning the Technical Guidance on the Implementation of Government Duties in the Oil and Gas Sector;
  3. Minister of Energy and Mineral Resource Regulation No. 0008/2005 concerning the Incentives to Develop the Marginal Oil Field;
  4. Minister of Energy and Mineral Resource Regulation No. 0044/2005 concerning the Provision and Distribution of Specific Types of Oil Fuel;
  5. Minister of Energy and Mineral Resource Regulation No. 26/2006 concerning the Oil Fuel for the Empowerment of the Shipping Industry;
  6. Minister of Energy and Mineral Resource Regulation No. 02/2008 concerning the Implementation of Oil and Gas Domestic Market Obligations by Cooperation Contract Contractors;
  7. Minister of Energy and Mineral Resource Regulation No. 22/2008 on Types of Non-refundable Fees to the Cooperation Contract Contractors in the Oil and Gas Upstream Sector;
  8. Minister of Energy and Mineral Resource Regulation No. 06/2010 concerning the Policy Guidelines on Increasing the Oil and Gas Production;
  9. Minister of Energy and Mineral Resource Regulation No. 31/2013 concerning the Foreign Workers;
  10. Minister of Energy and Mineral Resource Regulation No. 22/2016 concerning the Implementation of the Construction of the Small Scale Domestic Oil Refineries;
  11. Minister of Energy and Mineral Resource Regulation No. 51/2017 concerning the Development and Management of Stated Owned Assets in the Oil and Gas Upstream Activity.

Minerals and Coal

  1. Minister of Mining and Energy Decree No. 2555.K of 1993 concerning the Granting of Mining Inspection Enforcer in the General Mining Sector;
  2. Minister of Mining and Energy Decree No. 1614 of 2004 concerning the Guidelines on Processing the Contract of Work (Kontrak Karya or “KK”) and Coal Contract of Work (Perjanjian Karya Pengusahaan Batubara or “PKP2B”) Applications for Foreign Capital Investment;
  3. Minister of Mining and Energy Decree No. 134.K/201/MPE/1996 concerning the Use of Maps, Clarification of Borderlines and Areas of Mining Authorization (Kuasa Pertambangan or “KP”) KK and PKP2B in the General Mining Sector;
  4. Minister of Mining and Energy Decree No. 135.K/201/MPE/1996 concerning the Abilities and Capabilities of the KP, KK and PKP2B Applicants;
  5. Minister of Mining and Energy Decree No. 103.K/008/MPE/1994 concerning the Supervision of the Implementation of the Environmental Management Plans and Environmental Monitoring Plans in the Mining and Energy Sector;
  6. Minister of Mining and Energy Decree No. 620.K/008/MPE/1994 concerning the Environmental Impact Analysis Commission of the Department of Mining and Energy;
  7. Minister of Mining and Energy Decree No. 2202.K/201/MPE/1994 concerning the Granting of Preliminary Investigation Permission Letter for Foreign Capital Investment or Domestic Capital Investment in the General Mining Sector.

Electric Power 

  1. Minister of Mining and Energy Regulation No. 03.P/451/M.PE/1991 concerning the Requirements for Electric Power Installation;
  2. Minister of Energy and Mineral Resource Regulation No. 33/2008 concerning the Electric Power Sales Price provided by PT Pelayanan Listrik Negara (PT PLN) Persero Batam;
  3. Minister of Energy and Mineral Resource Regulation No. 04/2012 concerning the Electric Power Purchase Price by PT PLN Persero from the Small and Medium Scale Renewable Energy Electric Power Plant or Excess of Electricity Power;
  4. Minister of Mining and Energy Regulation No. 02.P/451/M.PE/1991 concerning the Relationship between the Holders of Electricity Business Authorization (Kuasa Usaha Ketenagalistrikan) and the Holders of Electricity Business License (Izin Usaha Ketenagalistrikan) for Public and People interest.

New Renewable Energy and Energy Conservation   

  1. Minister of Energy and Mineral Resource Regulation No. 13/2012 concerning the Saving of Electric Power Consumption;
  2. Minister of Energy and Mineral Resource Regulation No. 14/2016 concerning the Energy Conservation Services Business;
  3. Minister of Energy and Mineral Resource Regulation No. 19/2015 concerning the Power Purchases from the Hydro Power Plants with a Maximum Capacity of 10 MW by PT PLN Persero;
  4. Minister of Energy and Mineral Resource Regulation No. 19/2016 concerning the Power Purchases from the Solar Photovoltaic Power Plants by PT PLN Persero;
  5. Minister of Energy and Mineral Resource Regulation No. 21/2016 concerning the Power Purchases from the Biomass and Biogas Power Plants by PT PLN Persero;
  6. Minister of Energy and Mineral Resource Regulation No. 11/2009 concerning the Guidelines on Geothermal Activities;
  7. Minister of Energy and Mineral Resource Regulation No. 18/2012 as the amendment of Minister of Energy and Mineral Resource Regulation No. 11/2009.

SKK Migas

  1. Guidelines on Operating Procedures No. 012 of 2007 concerning the Operation and Maintenance of Oil and Gas Distribution Pipelines;
  2. Guidelines on Operating Procedures No. 013 of 2007 concerning the Operation and Maintenance of Oil Storage Tank;
  3. Guidelines on Operating Procedures No. 037 of 2017 concerning the Approval to Produce 1 Water Well.

The details of regulations that are simplified or revoked as listed in the press release on 12 February 2018 (the list of regulations from SKK Migas have yet to be included) are as follow.

Regulation (Before) Regulation (After) Substance
Oil and Gas = 7 Regulations
1. Minister of Energy and Mineral Resource Regulation No. 16/2011 – Oil Fuel Distribution Activities COMBINED
1. Minister of Energy and Mineral Resource Regulation Draft – Distribution of Oil Fuel (BBM), Gas Fuels (BBG), and Liquified Petroleum Gas (LPG)
  • simplification of legal form of the Distributors of BBM, BBG, and LPG
  • provides legal basis for sub-distributors (for BBM One Price program)
  • eliminating the requirement ofSKP‘s (Surat Ketetapan Pajak) approval and to only report its distributors to the Directorate General of Oil and Gas

 
2. Minister of Energy and Mineral Resource Regulation No. 26/2009 – Supply and Distribution of LPG
3. Minister of Energy and Mineral Resource Regulation No. 037/2006 – Procedure for Application of Imports and Goods Settlement for Upstream Business Operations REVISED

2. Minister of Energy and Mineral Resource Regulation Draft – Imports of Operational Goods for Upstream Oil and Gas Business Activities
  • simplification of procedures and service improvements in the application of the plan for the needs of imported goods
  • accommodate the regulation on the import of operating goods for the Contractor whose Cooperation Contract (Kontrak Kerja Sama or“KKS”) is in the form of Gross Split Contract
4. Minister of Energy and Mineral Resource Regulation No. 06/2016 – Stipulation of Allocation and Utilization and the Price of Gas REVISED

3. Minister of Energy and Mineral Resource Regulation Draft – Amendment to Regulation of Minister of Energy and Mineral Resource Regulation no. 06/2016

 the revision purpose is to provide a positive investment climate in the field of gas through the involvement of BU Niaga Gas Bumi which has a gas distribution network facility
5. Minister of Energy and Mineral Resource Regulation No. 38/2017 – Examination of Safety Installation and Equipment of Oil and Gas Business Activities REVISED

4. Minister of Energy and Mineral Resource Regulation Draft – Examination of Safety Installation and Equipment of Oil and Gas Business Activities
  • simplification for the purpose to simplify the operation approval procedure as output of safety inspection of oil and gas installation and equipment
  • eliminating design approval and approval of use and the Directorate General of Oil and Gas only issued the operation approval.
6. Minister of Energy and Mineral Resource Regulation No. 35/2008 – Procedures for the Stipulation and Tender of Working Areas of Oil and Gas COMBINED

5. Minister of Energy and Mineral Resource Regulation Draft – Tender of Working Areas of Oil and Gas
  • Available Working Area  auction arrangements in addition to Regular Auction and Direct Deals Auction (Joint Study)
  • provide legal certainty regarding the period of announcement & signing of Cooperation Contract (Kontrak Kerja Sama or “KKS”)
  • privilege arrangement for Pertamina to obtain the Participating Interest (PI) in the maximum of 15% from winning bidder
7. Minister of Energy and Mineral Resource Regulation No. 36/2008 – Procedures for the Stipulation and Tender of Working Areas of Coal Methane Gas
8. Minister of Energy and Mineral Resource Regulation No. 05/2012 – Procedures for Stipulation and Tender of the Working Areas of Non-Conventional Oil and Gas
9. Minister of Energy and Mineral Resource Regulation No. 01/2011 – Technical Guidelines for Discharge of Offshore (lepas pantai) Oil and Gas Installation COMBINED

6. Minister of Energy and Mineral Resource Regulation Draft regarding Post-Operation Activities in Upstream Oil and Gas Business Activities

 arrangement for Contractor’s obligation to conduct post-operation activities
10. Minister of Energy and Mineral Resource Regulation No. 27/2008 – Oil and Gas Supporting Business Activities REVISED

7. Minister of Energy and Mineral Resource Regulation Draft – Oil and Gas Supporting Business Activities

 simplification of procedures in oil and gas supporting business activities

(removing Letter of Registration of Supporting Business Activity (Surat Keterangan Terdaftar Usaha Penunjang Migas or “SKT”) requirement and the Letter of Capacity of Supporting Business Activity (Surat Kemampuan Usaha Penunjang or “SKUP”) is already sufficient.
Electric Power – 1 Regulation
11. Minister of Energy and Mineral Resource Regulation No. 0045/2005 –Installation of Electricity COMBINED

8. Minister of Energy and Mineral Resource Regulation Draft – Safety of Electricity

 Adding some substance according to the mandate of Government Regulation No. 14/2012, not only installation of electricity but also the substances concerning the safety of electricity
12. Minister of Energy and Mineral Resource Regulation No. 046/2006 – Amendment of the Minister of Energy and Mineral Resource Regulation No. 0045/0045 regarding Installation of Electricity

 
Mineral and Coal = 1 Regulation
13. Minister of Energy and Mineral Resource Regulation No. 12/2011 – Procedure for Stipulation of the Mining Area(Wilayah Usaha Pertambangan or “WUP”) and Information System of Mineral and Coal Mining Areas    

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