EMIS Emerging Market Information Service Indonesia Power Sector | Page 13

Government Policy
Foreign ownership

A law from 2010 imposes limits on foreign ownership in various industries. As much as 95% of foreign ownership is allowed in projects
for electricity production over 10 MW. The remaining 5%, however, must be owned by Indonesian companies or individuals. Projects
with 10 MW or less may be owned solely by Indonesian companies.

Permits
In order to be allowed to operate in Indonesia, energy companies must obtain a series of permits from various governmental agencies and
ministries. The main permits that energy producers must have are:
Registration in the Investment Coordinating Board for the establishment of a new company;
A Business License or Uzin Usaha;
Analisis Mengenai Dampak Lingkungan (AMDAL) for approved environmental impact;
A Location Permit (Izin Lokasi);
Electricity Business License (Izin Usaha Penyediaan Tenaga Listrik or IUPTL).

Regulations
The growing shortage of energy capacity pushed forward the adoption of several new regulations and policies, relating to energy security, access to
electricity and usage of renewable sources. Three regulations are especially important for the energy sector:
- A Decree from 2006 states that the state company PLN is obliged to purchase electricity from renewable energy producers.
- The Energy Act of 2009 states that PLN no longer has a monopoly over the supply of electricity to the end user. This ended the nearly 60-year
monopoly of the company.
- In 2010, law number 7 was passed which requires producers to offer electricity at affordable prices.

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