3. (HannyJBerchmans)Aspek-Aspek Legal Yang Diperlukan Di Dalam Pengembangan Pembangkit Listrik Energi Terbarukan

Aspek-aspek legal dalam

Pengembangan Pembangkit Listrik

Energi Terbarukan

Dr. Hanny J. Berchmans

Desember, 2012

Outline

1. Tahapan didalam proses Pengembangan Proyek

Energi Terbarukan (PPET)

2. Feasibility Study and Detail Engineering Design

(DED) documents

3. Underlying Laws/Regulation

4. Licensing and Permits

Outline




(DED) documents



Tahapan didalam proses PPET

• Small-scale renewable energy Independent Power Project (IPP) may take 3 to 5

years from the project initiation to commercial operation date (COD), during

which Project Sponsor would have to identify project opportunity, conduct

feasibility study, enter into a Power Purchase Agreement (PPA) with PLN as the

traditional off-taker, seek financing commitment, and implement the construction

work.

Project

Initiation

Feasibility

Study PPA Financing Constructi

on

Max 1 Year Typically 2 Years 7-8 months 6-12months

O & M COD

PPA: 15 to 30 years

Tahap Perencanaan Tahap Konstruksi Tahap Operasional

IDENTIFY

PROJECT

APPLY OTHER

NECESARRY

PERMITS

SIGN PPA

ADDITIONAL

INFORMATION

NEGOTIATING

LOAN

CONSTRUCT

PLANT

COMMISION

OPERATE

ISSUED

INITIAL PERMIT

(IJIN PRINSIP)

ISSUED

ALL OTHERS

PERMITS

MOU

(Optional)

ISSUE

APPOINTMENT

LETTER

FINANCIAL

CLOSURE

LETERS OF

INTENTS

LOAN

AGREEMENT

SUBSEQUESNT

DRAW DONW

MONITOR &

RECEIVE

PAYMENTS

INITIAL

FUNDING

REVIEW

PROPOSAL

PE

MD

A

DE

VE

LO

PE

R

PL

N

LE

ND

ER

2 - 3 month 3 - 6 month 6 - 12 month 24 month 12 month

LAND

ACQUISITION

4 2

PURCHASE

POWER

APPLY

PERMITS

SUBMIT

PROPOSAL

FEASIBILITY

STUDY

1

REVIEW

PROPOSAL

# = Potential issues

3

5

7

1. Ijin Lokasi

2. Pemanfaatan Air

3. Forestry

4. SIPA

5. ..

6. Ijin Lokasi

7. Pemanfaatan Air

8. Iijin …

9. Ijin …

10. Ijin …

8

9

FEED IN

TARRIF

6

Critical Timeline

for successful

project

Proses PPET

Outline




(DED) documents



Feasibility Study

Detail Engineering Design

Outline




(DED) documents



Renewable energy projects has been receiving strong supports from the Government and state-owned utility

company PLN, with a clear target and planning criteria:

Presidential Regulation 5/2006 on National Energy Policy:

Ministry of Energy and Mineral Resources Vision 25/25: Set a more ambitious target, achieving renewable

energy utilization up to 25% of national energy mix, and using energy efficiency initiative, reduce energy

demand by 34% compared to the business-as-usual scenario

PLN power generation development policy: Development of renewable energy resources does not

necessarily adhere to the least-cost principle, while maintaining reserve margin criteria and readiness of

project development (since RUPTL 2009)

Fuel % of National Energy Mix

by 2025

Oil 20%

Gas 30%

Coal 33%

Geothermal 5%

Others (e.g. nuclear, hydro, biomass, wind, etc.) 12%

Underlying Laws/Regulations:

National Energy Mix Target

RE Pricing Regulation

MEMR Regulation 4/2012 on Feed-In Tariff for RE (Hydro, Wind, & PV)

PPA Price Regional Adjustment

Connection to Medium Voltage (20

kV T/L):

P = Rp 656/kWh x F

Java and Bali, F =1

Sumatera and Sulawesi, F = 1.2

Kalimantan, NTB, NTT, F = 1.3

Maluku and Papua, F = 1.5

Connection to Lower Voltage

(220/380 Volt Lines):

P = Rp 1,004/kWh x F

• The regulation allow for higher negotiated PPA price, but subject to approval from MEMR

• For excess power, contracted capacity can be larger than own use

• For geothermal power project, capped at US cent 9.7/kWh


MEMR Regulation 4/2012 on Feed-In Tariff for RE (Biomass & Biogas)

Technology PPA Price Regional Adjustment

BIOMASS & BIOGAS Connection to Medium

Voltage (20 kV T/L):

P = Rp 975/kWh x F

Java, Madura, Bali, and Sumatera: F =1

Sulawesi, Kalimantan, NTB, NTT: F = 1.2


Connection to Lower

Voltage (220/380 Volt

Lines):


MSW – Zero Waste Connection to Medium Voltage (20 kV T/L):

P = Rp 1,050/kWh

Connection to Lower Voltage (220/380 Volt Lines):

P = Rp 1,398/kWh

MSW – Sanitary Landfill Connection to Medium Voltage (20 kV T/L):

P = Rp 850/kWh


P = Rp 1,198/kWh


MEMR Regulation 4/2012 on Feed-In Tariff for RE (Biomass & Biogas)

Technology PPA Price Regional Adjustment

BIOMASS & BIOGAS Connection to Medium

Voltage (20 kV T/L):

P = Rp 975/kWh x F

Java, Madura, Bali, and Sumatera: F =1

Sulawesi, Kalimantan, NTB, NTT: F = 1.2


Connection to Lower

Voltage (220/380 Volt

Lines):


MSW – Zero Waste Connection to Medium Voltage (20 kV T/L):

P = Rp 1,050/kWh


P = Rp 1,398/kWh

MSW – Sanitary Landfill Connection to Medium Voltage (20 kV T/L):

P = Rp 850/kWh


P = Rp 1,198/kWh

Tax Incentives for RE

Projects

MOF Regulation 21/2010 and 24/2010

1. Reduction of taxable net income up to 30% of equity (over 6 years of 5% each)

2. Accelerated depreciation and amortization of 2 – 10 years at 2.5 – 5% rate, depending on

type of assets

3. Withholding tax on dividend capped at 10% for foreign equity investor (can be lower in case

of tax treaty)

4. Loss compensation of 5 – 10 years

5. Exemption of value-added tax (VAT) for capital goods (e.g. engine, equipment, etc. except

for spare-parts)

6. Exemption of importation tax for machines, equipment, and construction materials

Outline




(DED) documents



Licenses/Permits:

Corporate Licenses (1)

No Provision Key Issues

1 In case of foreign

shareholder - the Approval

Letter of Foreign Capital

Investment ("SP-PMA")

The first step in establishing of a Foreign Capital Investment (“PMA”) company (for the purpose of this memorandum

hereinafter referred to as “IPP”) begins with the foreign investor’s submission of an application addressed to the

Chairman of BKPM. BKPM will then issue an SP-PMA addressed to the applicant, with copies to the related Indonesian

Government agencies. Please note that BKPM usually requires a recommendation from the Department of Energy and

Mineral Resources for the establishment of a PMA company engaging in private power business.

2 Minister of Law and Human

Rights (“MOLHR”) approval

of the IPP’s deed of

establishment.

Once the SP-PMA has been obtained, a deed of establishment of the IPP must be executed in notarial deed form

before a notary public. Once executed, the notary public must submit the deed of establishment to MOLHR for approval

within 60 days after execution accompanied by supporting documents.

Upon completion of the submission, MOLHR shall immediately electronically declare his non-objection to such

application. Within 30 days after the statement of non-objection, the applicant (by its notary) is obligated to physically

deliver the application letter including its supporting documents. Within 14 days after receiving the complete physical

documents, MOLHR shall issue its approval of the deed of establishment. Upon receiving approval from MOLHR, the

IPP becomes a legal entity.

The company data will be administered by MOLHR in its Company Register.

3 Certificate of Domicile

(“SKDP”) issued by the

Head of Sub District in

which the IPP is domiciled.

The SKDP is required before the IPP can obtain Taxpayer Registration Number (“NPWP”) and must be obtained before

the IPP may open the account or submit the Articles to the MOLHR. The SKDP can be obtained from the office of the

head of the city or village in which the IPP will be domiciled once the IPP has established an office and obtained a letter

from the building manager stating that it resides in that building.

Licenses/Permits:

Corporate Licenses (2)


4 Registration of the Deed of

Establishment with the

Department of Trade

(“DOT”).

In addition to the Company Register administered by MOLHR, DOT also maintains a Company Register.

DOT registration will need to be submitted after obtaining MOLHR approval. A Company Registration Certificate ("TDP")

will be issued upon filing. The TDP is valid for five years. Law No. 3/82 provides criminal sanctions for a failure to

register of three months imprisonment or a fine of three million Rupiah). However, these sanctions have not, to our

knowledge, ever been imposed in practice. The first DOT registration would be handled by the notary who notarizes the

Articles.

5 Corporate Financial Year

Reports (Pendaftaran

Laporan Keuangan Tahunan

Perusahaan or “LKTP”)

The IPP shall file its audited financial statements to the DOT at the latest by six months after the financial year ended.

6 Report on Domestic and

Foreign Capital Investment

Activities (Laporan Kegiatan

Perusahaan Penanaman

Modal Dalam Negeri dan

Penanaman Modal Asing or

"LKPM") – in case of foreign

shareholder

If the IPP does not possess a Permanent Operating License (“IUT”), the LKPM must be submitted to the BKPM twice a

year, not later than July 31 of the relevant year for the period from January 1 through June 30 and not later than

January 31 of the following year for the period from July 1 through December 31.

If the IPP is already in commercial operation and has obtained an IUT, the LKPM must be filed annually, not later than

January 31 of the relevant year for the previous calendar year.

Licenses/Permits:

Tax and Electricity Business Licenses


7 NPWP The NPWP is a Taxpayer registration number.

8 Taxable Entrepreneur

Registration Number (a

PKP number)

The PKP is required for the IPP to become the Value Added Tax (“VAT”) collector. The PKP is a VAT registration

number.

VAT will be payable on any invoice issued for taxable goods and services rendered in Indonesia. VAT is imposed on

most goods and services at a rate of ten percent. VAT is generally collected by entities having PKPs. While some

goods and services are exempted from VAT by government regulation, the delivery of electricity by IPP to PLN is

subject to VAT.

9 Permit for Electric Power

Business for Public Interest

(Izin Usaha

Ketenagalistrikan Untuk

Kepentingan Umum or

commonly referred to as an

“IUKU”)

This license is required to enable the IPP to conduct the supply of electric power for public interest.

IUKU for electric power supply for inter-province or that is connected with the National Transmission Grid (Jaringan

Transmisi Nasional or “JTN”) shall be issued by the Minister of Energy and Mineral Resources (“MEMR”) through the

Director General of Electricity and Energy Development (“DGEED”). By contrast, IUKU for supply of electricity for

regional areas which is not connected with the JTN shall be issued by the relevant regent / municipal government and

IUKU for supply of electricity for inter-regent or inter-city which is not connected to JTN shall be issued by the relevant

governor.

Licenses/Permits:

Land and Building Licenses (1)


10 Location Permit for the

power plant

The location permit is a license granted to a company to acquire the land in accordance with the local and regional

land use planning requirements.The location permit is issued by the regent or the municipal government based upon

the recommendation of the local BPN supervising the area in which the electric power project is located. Once the

location permit is issued, the IPP can start its activities to acquire the land including certification of title. The validity

period of a location permit is based on the total area of land, varying from one year to three years and can only be

extended one time for one additional year. The procedures for obtaining location permit will be subject to local

regulations where the electric power project is located. A location permit is not required where the land needed to

implement a project is less than 10,000 square meters.

11 Right to Build (Hak Guna

Bangunan or “HGB”) or

Right to Use (“Hak Pakai”)

A HGB title grants the titleholder the right to use and develop the land. By having HGB title, the IPP can construct

buildings and use the land. A HGB title is granted for a maximum term of 30 years, extendable for another 20 years.

At the end of the 50-year period, the title could then be renewed for another 30 years subject to the limited discretion

of the Government. A Hak Pakai title also grants the titleholder the right to use and develop land. A Hak Pakai title

would allow a titleholder to construct and operate the Project over the land. Hak Pakai may be granted for a maximum

period of 25 years and can be extended for a maximum period of 20 years. Given he lesser term of Hak Pakai, an

IPP should obtain HGB title. The subject HGB title should be “over” State land which means that there would be no

other underlying title holder so that the IPP can apply to the local BPN office for the relevant extension or renewal

without requiring the consent of any underlying title holder.

Licenses/Permits:

Importation and Labor Licenses


19 Import Duty Exemptions

and

Master List Approval

PMA companies may be entitled to certain exemptions, reductions and deferrals of import duties and taxes for raw

materials and capital equipment goods identified on a BKPM-approved “Master List”. The Master List must be

prepared and submitted to BKPM for approval. The Master List describes the capital goods to be imported for the

construction/operation of its facility and for the importation of raw materials.

20 Importers Identification

Number (APIT)

In order to import the capital goods and raw materials identified on a Master List, the IPP needs to obtain an APIT,

which constitutes the license to import the same.

21 Employee Social Security

(Jaminan Sosial Tenaga

Kerja or “Jamsostek”)

Companies employing more than ten employees are obliged to register themselves and their employees as Jamsostek

participants.

22 Worker Safety Approval

from Director of the

Supervision Directorate of

Work Safety Norms,

Company’s Hygiene and

Worker’s Health at the

DOMT.

Working places involving the generation, transformation, allocation, storage or distribution of electricity, gas, water and

oil must comply with this Work Safety Law. The safety conditions have been more specifically set forth in implementing

regulations in relation to the planning, production, transportation, circulation, marketing, installation, use, application

maintenance and storage of materials, goods, technical products and means of production, which involve or may

cause a danger of accident.

For the installation of electrical equipment or machinery in a workplace, the prior approval of the Supervision

Directorate of Work Safety Norms, Company’s Hygiene and Worker’s Health of the local DOMT must be obtained.

Use of electrical equipment or machinery in a workplace should also comply with the worker’s safety requirements and

is subject to a separate prior approval of the same health and safety Directorate.

23 Work permits for related

expatriates

In the event the IPP intends to employ expatriate, such expatriate shall first obtain the work permit.

Dr. Hanny J Berchmans

Project Development Manager

[email protected]

[email protected]

mailto:[email protected]

Documents

3. (HannyJBerchmans)Aspek-Aspek Legal Yang Diperlukan Di Dalam Pengembangan Pembangkit Listrik Energi Terbarukan