Minister revises controversial regulation

Minister of Energy and Mineral Resources Ignasius Jonan has issued new Ministerial Regulation No 48/2017, loosening its rein on companies engaged in oil and gas, mining, and power generation sectors.

The new regulation, issued on August 3, revises the much-criticized two-week old Ministerial Regulation No 42/2017, which required energy and mining firms to obtain the minister?s approval for change in top management and transfer of shares in a project.

According to the new ministerial regulation, companies engaged in the oil and gas, mining and power generation sectors are no longer required to seek for the minister?s approval for change in top management as well as for transfer of shares. They are now only required to make report to the ministry.

However, specifically for upstream oil and gas companies, transfer of participating interest that will lead to change in controlling ownership will still require the approval of the minister, by taking into account the consideration of upstream oil and gas authority SKK Migas.

Head of the ministry?s Legal Bureau, Hufron Asrofi said in a statement late Monday that this ministerial approval is line with stipulations set under existing government regulation.

Hufron said that the revision of Ministerial Regulation No 42 into Ministerial Regulation No 48 was made following recent direction from President Joko Widodo, who criticized the minister for issuing difficult regulations deemed hampering investment activities.

Industry players welcome the new regulation, describing it as a first step toward improving the regulation environment and investment climate in the sectors. Indonesian Petroleum Association (IPA) Executive Director Marjolijn Wajong said that the new ministerial regulation incorporated many of the group?s suggestions. Head of the Indonesian Hydro Power Plant Operators Association (APPLTA) Riza Husni said the new regulation has been applauded by players in the electricity sector, and added that they are ready to increase investment in the renewables sector.

Aside from Ministerial Regulation No 42, industry players have also criticized other recent regulations introduced by the minister. . In the upstream oil and gas sector, some industry players opposed Ministerial Regulation No 8/2017 on the application of gross split scheme on new oil and gas contracts. In the renewables sector, industry players criticized Ministerial Regulation No 12/2017, which limits electricity tariff generated by renewable-based power plants at 85 percent of the regional electricity supply cost of PLN (BPP).

Editing by Reiner Simanjuntak