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Legal Updates

New Electricity Law - Law No. 30 of 2009

The Parliament of the Republic of Indonesia recently passed the Law No. 30 of 2009 dated 23 September 2009 regarding Electricity (“Electricity Law”) that will replace the existing Law No.15 of 1985. In 2002, the Government has enacted the Law No. 20 of 2002 regarding Electricity to replace Law No.15 of 1985; however, in December 2004, the Constitutional Court (Mahkamah Konstitusi) revoked Law No. 20 of 2002 because key provisions of it contravened the Indonesian Constitution. The new electricity law's purpose is to update the law to better reflect current practice and to strengthen the role of the Regional Government (Pemda), in line with the spirit of regional autonomy.

Under the Electricity Law, PLN is no longer the holder of an exclusive electricity authorization from the Central Government to provide electricity for public use (PKUK – Pemegang Kuasa Usaha Ketenagalistrikan). As a consequence, PLN no longer has a monopoly to supply and distribute electricity to end customers. Instead, the provision of electricity for public use may be carried out by state-owned companies (BUMN), regional-owned companies (BUMD), private business entities, cooperatives and non-governmental organizations who obtained an Electricity Business License for Public Use (Izin Usaha Penyediaan Tenaga Listrik - IUPTL). This Law opens up opportunity for private sector who intends to do business in energy sector. However, the Electricity Law gives the right of first priority to BUMN (i.e. PLN) to supply electricity for public use.

The Electricity Law allows, with approval from the Central Government, the import of electricity by holders of IUPTL from foreign power producers where: (i) there is a shortage of electricity within a local region; (ii) the importation of electricity is only to enable its supply to that local region; and (iii) the importation will not harm the national interest in terms of sovereignty, security and economic development.

It is expected that the implementing regulations will be issued by the Central Government, at the latest, one year after the enactment of the Electricity Law.

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