Electricity Supply Business

Publish Date 17 October 2019    |    Download Article (pdf)

Indonesia is the fourth most populous countries in the world with a population around 260 million inhabitants, and its national electricity capacity recorded until the first quarter of 2019 is 58,390 Mega Watt (MW). Furthermore, according to Statistics Indonesia (Badan Pusat Statistik – BPS) on 2013 concerning Indonesia Population Projection for 2010–2035, the population growth in 2018–2020 will be around 1,19% and for 2020 –2025 by around 1,00%.

From such projection, the needs of power supply will be increasing, as mentioned in National Electricity General Plan (Rencana Umum Ketenagalistrikan Nasional – RUKN) of 2019-2038, it is projected that the demand of national electricity power in the next period of 10 years will be growing in average of 9,1% per annum, and in the next 20 years ahead by around 7,9% per annum.

Therefore, the demands for national power supply will be around 356 TWh by 2020 and increase to 804 TWh by 2030, then 1,361 TWh by 2038. Those numbers make the energy sector as good opportunity for private company to gain profit by investing in Indonesia.

The law of electricity in Indonesia is regulated under the Law No. 30 of 2009 on Electricity (“Law 30/2009”). Refer to Article 8 of Law 30/2009, the business on electricity sector in Indonesia are divided into the power supply business and the power support business. While the government agencies that deal with electricity are the Directorate General of Electricity in the Ministry of Energy and Mineral Resources (http://www.djk.esdm.go.id/).

Power supply business means power procurement through power generation, transmission, distribution, and sale to consumers. Further provisions on this matter are regulated under Government Regulation No. 14 of 2012 on Power Supply Business Activity which, as amended by Government Regulation Number 23 of 2014 concerning amendments of GR 14/2012 (“GR of Power Supply”).

According to Article 2 GR of Power Supply, the power supply business include as follows:

A. Public Power Supply Business

Public power supply business shall include the following types of business:

1. Power generation;
2. Power transmission;
3. Power distribution; and/or
4. Power sale.

Referring to Article 3 paragraph (2) on GR of Power Supply, the type of all above-mention public purpose-business may be conducted in an integrated manner.
The integrated manner business that could be done means following arrangement:

i.   Power generation, power transmission, power distribution, and power sale that perform in one business unit;
ii.  Power generation, power transmission, and power sale that perform in one business unit; or
iii. Power generation, power distribution, and power sale that perform in one business unit

According to Article 9 paragraph (1) on GR of Power Supply, the business entities that may conduct to run the public power supply are state-owned enterprise entities, region-owned enterprise entities, private company entities, cooperatives, and self-reliant communities engaged in the field of power supplies. This business only conducted after gained Electricity Supply Business Permit (Izin Usaha Penyediaan Tenaga Listrik – IUPTL).

B. Captive Power Supply Business

The definition of ‘captive’ in this phrase refer to the explanation of Article 27 paragraph (1) on GR of Power Supply which means the power supply for internal use and not for sale.

While for the types of captive power supply business are as follows:

1. Power generation;
2. Power generation and distribution; or;
3. Power generation, transmission, and distribution; and/or

It has wider range of entities that may conducted and open to run the captive power supply business, referring to Article 27 paragraph (1) GR of Power Supply, which stipulated government institutions, region governments, state-owned enterprise entities, region-owned enterprise entities, private company entities, cooperatives, individuals, and institution/other business entities (foreign representatives or foreign business entities). Captive power supply business with electricity generation capacity above 200kVA may conducted after gained Operating Permit (Izin Operasi – IO).