Indonesia Presidential Regulation No. 112 Of 2022: Aftermath to Sale And Purchase Agreement Of Electricity With Electric Power Generation Business Entity

Presidential Regulation No. 112 Of 2022: Aftermath to Sale And Purchase Agreement Of Electricity With Electric Power Generation Business Entity

Yoga Adi Nugraha, Nurmanto, Febriana Dwi Hapsari

Presidential Regulation No. 112 of 2022 introduces new guidelines for the sale and purchase of electricity from renewable energy sources in Indonesia. This regulation outlines the procurement processes, including direct appointment and direct election methods, and sets criteria and timelines for each. It also details how PT Perusahaan Listrik Negara (PLN) determines electricity prices and the key elements required in Electricity Purchase and Sale Agreements (PJBL). This article explores these provisions and their impact on renewable energy stakeholders.

1. Q: How does the process of electricity purchase from a power plant business entity that utilizes Renewable Energy Resources (“Electric Power Generation Business Entity”)?

A:  Presidential Regulation Number 112 of 2022 on the Acceleration of Renewable Energy Development for Power Supply (“PR 112/”) divides the tender process of electricity purchase by considering the type of renewable energy used as a power generator.[1].

The process of such electricity procurement is as follows:

(I) Direct Appointment

Electricity purchase in this manner is only carried out to purchase electricity that meets the criteria as provided in Article 14 paragraph (2) of PR 112/2022, including hydroelectric power plants (“PLTA“) which utilize water power from reservoirs. This type of purchase is completed within a maximum period of 90 calendar days[2].

(ii) Direct Election

Electricity purchase in this manner is carried out by offering the lowest price based on the highest benchmark price and is carried out transparently and fairly, without giving privileges to any party. This type of purchase process is completed within a maximum period of 180 calendar days[3].

2. Q: How to determine and calculate the electricity price purchased by PT Perusahaan Listrik Negara (Persero) (“PLN”) from the Electric Power Generation Business Entity?

A: PT PLN in purchasing electricity from an Electric Power Generation Business Entity shall pay attention to:[4]

(i) the highest benchmark prices as provided under Appendix I of PR 112/2022; or

(ii) the agreement price.

The prices above are calculated with or without considering location factors as stated in Appendix II of PR 112/2022. This electricity purchase price is the price used in the PJBL and is valid from the Commercial Operation Date (“COD“)[5].

The above purchase price is carried out with the following conditions:[6]

(i) Negotiation with the ceiling limit based on the highest benchmark price;

(ii) without escalation during the PJBL term; and

(iii)apply as a price approval from the Minister of Energy and Mineral Resources (“MEMR”).

A simple calculation of purchasing electricity at the highest benchmark prices can be seen in the following illustration:

Illustration

If the purchase of electricity is made from a hydroelectric power plant that utilizes power from a stream located in Kepulauan Riau, then the electricity capacity is up to 1MW from Year 1 until 10 is calculated with the formula: (11.23 x 1.20) cent USD/kWh.

3. Q: What are the main points that shall be included in the content of the Electricity Purchase and Sale Agreement (“PJBL”) regulating the purchase of electricity from the Electric Power Generation Business Entity?

A: The Electric Power Generation Business Entity that has been determined as the winner will enter a contract with PT PLN and is designated as the Power Plant Developer (“PPL”). The contract between PT PLN and PPL is regulated and agreed upon in PJBL[7].

The main points in the PJBL itself are regulated under MEMR Regulation 10/2017. The PJBL between PLN and PPL must at lease contain the following provisions:[8]

a.      PJBL period;

b.      Rights and obligations of the buyer and seller;

c.      Risk allocation;

d.      Project-implementation guarantee;

e.      Commissioning and COD;

f.        Supply of fuels;

g.       Transaction;

h.      System-operation control;

i.        Penalties related to the power-plant performance;

j.        PJBL termination;

k.       Transfer or rights;

l.        Requirements for price adjustment;

m.    Dispute settlement; and

n.      Force Majeure.

Footnotes

[1] Article 4 paragraph (3) letter a of PR 112/2022

[2] Article 15 paragraph (1) of PR 112/2022 jo. Article 4 paragraph (1c) of Minister of Energy and Mineral Resources Regulation No. 50 of 2017 regarding Utilization of Renewable Energy Resources for The Production of Electricity as lastly amended by Minister of Energy and Mineral Resources Regulation No. 4 of 2020 (“MEMR Regulation 50/2017”).

[3] Article 16 paragraph (2) of PR 112/2022 jo. Article 4 paragraph (1b) of MEMR Regulation 50/2017.

[4] Article 5 paragraph (1) of PR 112/2022.

[5] Article 5 paragraph (3) of PR 112/2022.

[6] Article 6 paragraph (1) of PR 112/2022.

[7] Article 21 paragraph (1), (2), and (3) of PR 112/2022.

[8] Article 3 of MEMR Regulation No. 10 of 2017 regarding Main Provisions for Electricity Purchase Agreement as lastly amended by MEMR Regulation No. 10 of 2018 (“MEMR 10/2017”).

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Nurmanto

Middle Associate

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