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Ada Pertanyaan? Hubungi Kami Ari Pramuditya, Kartini L Makmur
The Ministry of Energy and Mineral Resources. Photo by: RES
The government has reaffirmed its commitment to improving regulation and development in the renewable-energy sector in a bid to attract more investors. Regulation is seen as crucial to the development of renewable-energy businesses, and Rida Mulyana, Director General of Energy Conservation and Renewable Energy at the Ministry of Energy and Natural Resources, recently stated that if regulations continue to improve, then investors will be more interested in investing in Indonesia.
According to Mr. Mulyana, the reason for this is that possession of an abundant supply of natural resources is not on its own enough to encourage investment in Indonesia’s renewable-energy sector. Instead, Mr. Mulyana emphasized the importance of legal certainty in ensuring a smooth passage for any investment project.
“Improvements to the regulatory framework will hopefully make investors all the more interested in investing in the development of renewable energy in Indonesia,” explained Mr. Mulyana in his office on Friday, 27 November 2015.
Mr. Mulyana further stated that a number of improvements had already been implemented and by way of example cited Minister of Energy and Mineral Resources Regulation No. 17 of 2014 on the application of geothermal rates based on a feed in tariff scheme. Mr. Mulyana proudly stated that this regulation was one of the best in the world.
In addition to issuing the tariff-scheme regulation, Mr. Mulyana also promised to complete the drafting of a government regulation (Rancangan Peraturan Pemerintah – “RPP”) relating to geothermal energy as soon as possible. The new regulation, which is based on Law No. 21 of 2014 on Geothermal Energy, has now entered its final drafting phase.
Mr. Mulyana is positive that the RPP on Geothermal Energy will be ratified by the end of this year and is well aware that the new regulation has been keenly awaited by many parties. Indeed, not only businessmen but also local governments, who stand to benefit from any new investments, are awaiting the introduction of the new RPP.
“The new Geothermal Law has been drafted with reference to two of the three currently existing RPP, including the RPP on bonus production, and the new law is highly anticipated by its future beneficiaries. Hopefully, it will become a PP before the end of 2015,” Mr. Mulyana added.
Syamsir Abduh, a member of the National Energy Council, also affirmed that regulatory support was vital in order to provide legal certainty as regards the development of the renewable-energy sector here. According to Abduh, Indonesia has a huge development potential in the sector but development is currently being hampered by a lack of supportive regulations.
Abduh has thus welcomed the government's efforts to continue to improve regulation, however he warned that decent regulations would become meaningless if they weren’t firmly implemented. Mr. Abduh is therefore hoping that the government will be able to commit to the optimal implementation of its various regulations and policies.
In addition to legal certainty, Mr. Abduh believes that the government also needs to offer incentives within the renewable-energy sector. Abduh thus stated that one significant incentive would be the easing of license processing. According to Mr. Abduh, license-processing difficulties will have the effect of hampering any potential investment.
“And it’s not only licenses, as the government also needs to offer incentives which relate to capital,” Abduh added.
Abduh asserted that funding mechanisms for the development of renewable energy were still limited. However, the level of technology required for renewables development is very high and consequently the amounts of funding needed for such developments are also high.
“Many such investments are still dependent on advanced technologies from developed countries. The cost of energy production from renewable energy is therefore relatively higher so it won’t be able to compete with fossil fuels for a few decades yet, as these are heavily subsidized by the state," Abduh stated.
Mr. Abduh suggested that the government issue a fiscal policy, as well as a subsidy and investment policy. Abduh believes that if such policies are implemented, then the development of renewable energy in Indonesia will have a bright future ahead of it. Moreover, the public will then have a choice of energies and can reduce their overreliance on fossil fuels.
(For more information on the Geothermal Law, see ILB No. 2465 and ILD No. 373)
(sp)
Ari Pramuditya, Kartini L Makmur
The Ministry of Energy and Mineral Resources. Photo by: RES
The government has reaffirmed its commitment to improving regulation and development in the renewable-energy sector in a bid to attract more investors. Regulation is seen as crucial to the development of renewable-energy businesses, and Rida Mulyana, Director General of Energy Conservation and Renewable Energy at the Ministry of Energy and Natural Resources, recently stated that if regulations continue to improve, then investors will be more interested in investing in Indonesia.
According to Mr. Mulyana, the reason for this is that possession of an abundant supply of natural resources is not on its own enough to encourage investment in Indonesia’s renewable-energy sector. Instead, Mr. Mulyana emphasized the importance of legal certainty in ensuring a smooth passage for any investment project.
“Improvements to the regulatory framework will hopefully make investors all the more interested in investing in the development of renewable energy in Indonesia,” explained Mr. Mulyana in his office on Friday, 27 November 2015.
Mr. Mulyana further stated that a number of improvements had already been implemented and by way of example cited Minister of Energy and Mineral Resources Regulation No. 17 of 2014 on the application of geothermal rates based on a feed in tariff scheme. Mr. Mulyana proudly stated that this regulation was one of the best in the world.
In addition to issuing the tariff-scheme regulation, Mr. Mulyana also promised to complete the drafting of a government regulation (Rancangan Peraturan Pemerintah – “RPP”) relating to geothermal energy as soon as possible. The new regulation, which is based on Law No. 21 of 2014 on Geothermal Energy, has now entered its final drafting phase.
Mr. Mulyana is positive that the RPP on Geothermal Energy will be ratified by the end of this year and is well aware that the new regulation has been keenly awaited by many parties. Indeed, not only businessmen but also local governments, who stand to benefit from any new investments, are awaiting the introduction of the new RPP.
“The new Geothermal Law has been drafted with reference to two of the three currently existing RPP, including the RPP on bonus production, and the new law is highly anticipated by its future beneficiaries. Hopefully, it will become a PP before the end of 2015,” Mr. Mulyana added.
Syamsir Abduh, a member of the National Energy Council, also affirmed that regulatory support was vital in order to provide legal certainty as regards the development of the renewable-energy sector here. According to Abduh, Indonesia has a huge development potential in the sector but development is currently being hampered by a lack of supportive regulations.
Abduh has thus welcomed the government's efforts to continue to improve regulation, however he warned that decent regulations would become meaningless if they weren’t firmly implemented. Mr. Abduh is therefore hoping that the government will be able to commit to the optimal implementation of its various regulations and policies.
In addition to legal certainty, Mr. Abduh believes that the government also needs to offer incentives within the renewable-energy sector. Abduh thus stated that one significant incentive would be the easing of license processing. According to Mr. Abduh, license-processing difficulties will have the effect of hampering any potential investment.
“And it’s not only licenses, as the government also needs to offer incentives which relate to capital,” Abduh added.
Abduh asserted that funding mechanisms for the development of renewable energy were still limited. However, the level of technology required for renewables development is very high and consequently the amounts of funding needed for such developments are also high.
“Many such investments are still dependent on advanced technologies from developed countries. The cost of energy production from renewable energy is therefore relatively higher so it won’t be able to compete with fossil fuels for a few decades yet, as these are heavily subsidized by the state," Abduh stated.
Mr. Abduh suggested that the government issue a fiscal policy, as well as a subsidy and investment policy. Abduh believes that if such policies are implemented, then the development of renewable energy in Indonesia will have a bright future ahead of it. Moreover, the public will then have a choice of energies and can reduce their overreliance on fossil fuels.
(For more information on the Geothermal Law, see ILB No. 2465 and ILD No. 373)
(sp)