PROCEDURE FOR DIRECT APPOINTMENT OF HYDROELECTRIC POWER PLANTS

Introduction

To achieve energy security, the Government of Indonesia has stipulated that the New Energy and Renewable Energy must reach a minimum of 23% (twenty-three percent) of total energy generated on 2025 in accordance with the National Medium-Term Development Plan and that by 2050 this must reach at least 31% (thirty-one percent) in accordance with the National Long-Term Development Plan. In order to support the Government’s plan, the Ministry of Energy and Mineral Resources   passed the Second Amendment to the Regulations of the Minister of Energy and Mineral   Resources No. 50 of 2017 concerning the Utilization of Renewable Energy Resources for the Provision of Electricity (“Permen ESDM 4/2020″) on 23 February 2020.

Permen ESDM 4/2020 provides a greater  opportunity for business entities to be able to participate in the construction of power plants by utilizing Renewable Energy Sources (EBT), especially using hydropower, which generates its power from the flow/waterfall of river water and /or hydropower from reservoirs/dams or irrigation channels whose construction is multipurpose.[1]

EBT electricity purchase process by PLN can not only can be through direct election, but can also be purchased through direct appointment in the following conditions:

1. local electrical power systems in a crisis or emergency condition of electricity supply;
2. purchase of excess power, including the purchase of electricity through the cooperation of the holder of the business area of electricity supply;
3. addition of generating capacity at power stations that have been operating in the same location; or
4. purchase of electricity from power plants that use renewable energy in the event that there is 1 (one) prospective electricity provider.[2]

The process of direct appointments of business entities must be completed within a period of no longer than 90 (ninety) calendar days, including the process of qualification, entry and evaluation of offers, and the signing of the Electricity Sale and Power Purchase Agreement (PJBL).[3]

business entities that have gone through the process of direct appointment, can hold PJBL with PT PLN (Persero) with a maximum period of 30 (thirty) years.[4]

Despite the stipulated requirements regarding direct appointments in the process of selecting business entity candidates, Permen ESDM 4/2020 also changed the pattern of cooperation previously stipulated in the Regulation of the Minister of Energy and Mineral Resources No. 5 of 2017 concerning the Utilization of Renewable Energy   Sources for the Provision of Electricity, which previously used   cooperation to   build, own, operate and divert ( Build, Operate, Own /BOO).

With some of the provisions mentioned above, the Government of Indonesia hopes to accelerate the development of renewable energy for the benefit of electricity as mentioned in the Background of Permen ESDM 4/2020. (TWK)

[1] Article 4 Numbers (1a) Permen ESDM 4/2020

[2] Article 4 Numbers (1b) Permen ESDM 4/2020

[3] Article 4 Numbers (5) Permen ESDM 4/2020

[4] Article 7 Numbers (1) and (3) Permen ESDM 4/2020