New regulation limits PPA at 30 years

Minister of Energy and Mineral Resources Ignasius Jonan has issued new Ministerial Regulation No 10/2017 on the basic principles of power purchase agreement (PPA).

According to the new regulation, the PPA between state-owned electricity firm PT PLN and independent power producer (IPP) is limited for 30 years starting from the date of operation of the plant.

Director General of Electricity at the ministry Jarman said that under the previous regulation, there was no time limit to the PPA.

The regulation also stipulates all contracts between PLN and the IPP must be based on built, operate and transfer (BOT) arrangement.

Jarman said that previously, the IPPs are allowed to either transfer the plant to PLN or other parties after the PPA expires. ?But now, once the contract expires, the power plant must be transferred to PLN, so all contracts must be based on BOT scheme,? he said, adding that the requirement is in line with the recent ruling of the Constitutional Court regarding the state?s presence in power generation business in the country.

Editing by Reiner Simanjuntak