Indonesia's Minister of Energy and Mineral Resources (MEMR) issued a regulation, in January 2015, intended to make it easier for PT PLN (Persero) (PLN), the country's state-owned electricity company, to buy electric power from Independent Power Producers (IPPs).
MEMR Regulation No. 3 of 2015 on Procedures for the Purchasing by PT PLN (Persero) of Electric Power from Mine-mouth Power Plants, Coal-fired Power Plants, Gas-fired/Gas-engine Power Plants and Hydropower Plants provides a pre-approved range of electricity tariffs, with reference prices depending on fuel/project type and plant capacity (increased capacity levels result in a lower tariff). PLN does not need to apply for ministerial approval of the tariff paid to an IPP so long as the price is at or below the specified reference price. Removing the need for ministerial approval should shorten the negotiation process between IPPs and PLN, in cases where direct appointment of an IPP is permitted, and give increased flexibility to PLN in agreeing to power purchases.
Previously, PLN was required to procure ministerial approval in all but limited cases (including certain renewable energy and small-scale projects). The regulation also provides that PLN is to adopt model procurement documents and model power purchase agreements for the various fuel/project types. Reportedly, MEMR hopes that the regulation will help to reduce barriers to power-plant development and will accelerate PLN's program for purchasing power from IPPs.