Minister Of Energy And Mineral Resources Regulates The Supervision Of Businesses In The Energy And Minerals Sectors



In July   2017, the Minister of Energy and Mineral Resources (“MEMR”) decided to issue the MEMR Regulation Number 42 Year 2017 (“MEMR Reg. 42/2017″) which regulated the Supervision within the Energy and Mineral Resources Business Sector. The MEMR Reg. 42/2017 stipulated that any transfers of participating interests and/or shares in upstream oil and gas contractors, downstream oil and gas companies, electricity companies (which hold the Electricity Supply Business License — lzin Usaha Penyediaan Tenaga Listrik (“IUPTL”)), and/or minerals and coal companies which are parties to Contracts of Works — Kontrak Karya, required an approval from MEMR. The same concept applies for changes made to the composition of Board of Directors (“BOD”) and/or Board of Commissioners (“BOC”).

 Such imposition received various reactions from investors and deemed to be an obstacle. MEMR decided to review the regulation and came up with MEMR Regulation Number 48 Year 2017 (“MEMR Reg. 48/2017″), issued three weeks after the MEMR Reg. 42/2017. Similar with MEMR Reg. 42/2017, MEMR Reg. 48/2017 covers supervision to the following: (a) change of ownership, Direct Control, and company stewardship which includes transfer of Participating Interests and/or shares also the change of BOD and/or BOC, and (b) the procurement of Biodiesel. The MEMR Reg. 48/2017 does not required an approval from MEMR in relation to point (a) above.

In electricity sector, the provisions are identical with MEMR Regulation Number 10 Year 2017 (“MEMR Reg. 10/2017″). Electricity companies which holds IUPTL shall not conduct transfer of shares before the power plant has achieved Commercial Operation Date, except if such transfer is meant for an affiliate of a sponsor, which shares is owned more than 90% by such sponsor who wish to transfer the shares. The said transfer can only be done on a company which is one level below the sponsor and shall receive written consent from power purchaser, i.e. PLN.

MEMR Reg. 48/2017 does not necessitate an approval for such acts, nevertheless stipulates that such acts shall be reported to MEMR within 5 days after the latest articles of association is ratified by the Minister of Law and Human Rights, provided also with:

  1. copy of the deed of General Shareholders Meeting;
  2. latest articles of association ratified by the Minister of Law and Human Rights; and
  3. copy of consent from power purchaser.

The same applies in terms of changing the composition of BOD and/or BOC. Such conduct shall be reported to the MEMR within 5 days after the latest articles of association is ratified by the Minister of Law and Human Rights, provided also with:

  1. latest articles of association ratified by the Minister of Law and Human Rights; and
  2. copy of consent from power purchaser.

The above provisions do not apply for power plant fuelled with geothermal. In addition, for renewable power plants (other than geothermal power plant), the mentioned above reports shall be carbon copied to General Director of New, Renewable, and Conservation of Energy.

As of the validity of the MEMR Reg. 48/2017, the followings provisions are revoked and declared null and void:

  1. Provisions which regulated the transfer of all rights and obligations of Contractor to a third party conducted other than at Indonesian stock market under the Minister of Mining and Energy Regulation Number 10/P/M/PERTAMBEN/1981;
  1. Provisions which regulated the transfer of rights in the form of shares under MEMR Reg. 10/2017; and
  1. MEMR Reg. 42/2017.

 

 

NAH’R MURDONO LAW OFFICE