To accelerate power plant development by the state electricity company (PLN), on January 12 2015 the minister of energy and mineral resources issued Regulation 3/2015. This regulation allows PLN to purchase electricity from independent producers through direct election and direct appointment, provided that certain criteria are met. Under the regulation, PLN must announce its electricity purchase plans and carry them out through an electronic procurement system. The procedures for the purchase of electricity through direct election and direct appointment are to be further regulated by the PLN board of directors.

Regulation 3/2015 also provides benchmark prices for the purchase of electricity. Independent producers may sell electricity to PLN without obtaining prior approval from the Ministry of Energy and Mineral Resources, provided that the electricity price is below the highest benchmark price set up by the ministry. For certain areas, PLN may purchase electricity at a price which exceeds the highest benchmark price based on its own estimation, with the approval of the ministry.

For further information on this topic please contact Kartika Budianti Lestari or Sevril Renishanti at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or email (klestari@abnrlaw.com or srenishanti@abnrlaw.com?). The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at www.abnrlaw.com.

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