On 10 October 2025, the President of Indonesia issued Presidential Regulation No. 109 of 2025 (“PR 109/2025”) on Urban Waste Management Through Waste-to-Energy (WTE) Development, replacing the previous framework under Presidential Regulation No. 35 of 2018 (“PR 35/2018”). The new regulation aims to tackle Indonesia’s escalating waste management challenges and landfill overcapacity by providing a stronger legal and investment foundation for WTE development.
Key provisions of PR 109/2025 that are of interest to business are summarized below.
- Revenue Stream
Unlike PR 35/2018, which had two revenue streams from tipping fees (for waste management) and electricity purchase price payments (for power generation), PR 109/2025 sets only one revenue stream from electricity purchase price payments. It sets the fixed electricity purchase price of USD 20 cent per kWh, excluding PLN’s infrastructure costs (“WTE FIT”). This flat rate applies to all WTE power projects, regardless of project capacity.PR 109/2025 imposes certain requirements for this rate to apply, including:- The WTE FIT, as set out in the relevant Power Purchase Agreement (“PPA”), is not as a result of price negotiation and without price escalation process.
- exemption from the take-and-pay obligation in case the WTE Independent Power Producer (IPP) cannot meet the agreed capacity due to uncontrollable technical issues including the availability of waste supply from regional government.
- Procurement
The new PR 109/2025 introduces the role of BPI Danantara (through its investment or operational holding, and/or state-owned enterprise or its subsidiary – “Danantara”) as the WTE procurement organizer.To enroll in the procurement process, the participants must meet the following criteria:- utilize advanced and environmentally friendly WTE technology suited to the waste type being processed;
- demonstrate financial capability and compliance with investment regulatory requirements; and
- have prior experience in WTE operations.
If there is only one eligible participant that meets the above requirements, PR 109/2025 allows procurement through the direct appointment method. If there are no eligible participants meet the tender requirements, the Ministry of Environmental Affairs should hold a coordination meeting with the Regional Government to explore collaboration with business(s) interested in developing WTE power projects.PR 109/2025 does not apply to WTE projects where the tender winner has been determined, or a PPA or cooperation agreement with relevant regional government has been signed.
The role of relevant regional government in the WTE project is to support the WTE power projects development by, among others, (i) securing at least 1,000 tons/day of domestic waste supplies over the course of WTE IPP operations, (ii) providing land for WTE IPP through borrow-for-use arrangement at no cost, and (iii) facilitating expedited licensing process for WTE power projects.
- PPA
- PPA for WTE is valid for 30 years as of the commercial operation date.
- Unlike PR 35/2018, which requires 35 business days after the issuance of the power purchase assignment letter from the MEMR, under PR 109/2025, PLN is required to sign the PPA within a maximum period of 10 business days after the WTE IPP has fulfilled the licensing requirements prior to commencing construction.
It is encouraging to see the Government of Indonesia taking steps to address long-standing challenges in previous WTE projects, including the dual revenue stream structure, PLN’s payment capacity, and persistent hurdles in licensing and land acquisition. That said, several aspects remain uncertain, for example, whether WTE FIT will be adjustable in cases such as unsuitable waste supply or rising project costs. Our team will closely monitor future developments and share updates as they unfold.
If you have further inquiries about this newsletter, please reach out to us at info@wplaws.com or any of our lawyers.