Electricity Generation

The need to develop electricity sources that are not dependent on oil fuels has been identified as a critical element of Indonesia's long- term national development goals. However, this Presidential Regulation does not signify a move away from fossil fuel dependence in the generation of electricity. On the contrary, the Regulation sets out the need for the development of electricity generation based on the use of available coal resources, which the Government has identified as being underutilized with respect to the generation of electricity.

To this end the Government has tasked PT. Perusahaan Listrik Negara (PLN or the State Electricity Company) to take the lead in the development of this alternative fuel source for the generation of electricity. The Regulation would require that the electricity generation plants developed under these provisions to be ready to commence operations in 2009. The Regulation also serves as a mechanism of creating greater legal certainty in this sector and as such sooth potential investor concerns regarding any investments they may make in these projects.