The Ministry of Energy and Mineral Resources has issued Regulation No. 49 of 2017, which amends Ministry Regulation No. 10 of 2017 on Main Provisions for Power-Purchase Agreements, with the ultimate goal of offering greater certainty as regards the sale and purchase of electrical power by removing government force majeure from the list of risks which must be covered. In essence, the amendment alters two main provisions, specifically: 1) The scope of the risks that must be covered by sellers and buyers of electrical power (risk allocation); and 2) The scope of force-majeure events.

With the objective of maintaining a healthy investment climate, as well as implementing the principles of Good Corporate Governance, the Ministry of Energy and Mineral Resources has issued Regulation No. 48 of 2017 on Business Supervision within the Energy and Mineral-Resources Sectors, which repeals and replaces Ministry Regulation No. 42 of 2017. In essence, this new regulation eases procedures which relate to the transfer of participating interests or shares, as well as changes which are made to boards of directors (BoDs) and/or boards of commissioners (BoCs) by eliminating the obligation to first secure approval from the Ministry. Instead, relevant parties will now only be required to submit reports to the Ministry.

Over the past month the Ministry of Energy and Mineral Resources (?Ministry?) has been subject to criticism from energy and mineral businesses (?Businesses?) following the issuance of Ministry Regulation No. 42 of 2017 on Business Supervision within the Energy and Minerals Business Sector. This regulation is expected to improve the effectiveness of the Ministry?s supervision of Businesses, however it is also perceived to represent a substantial obstruction to investment, both in terms of State-Owned Enterprises and private entities. The Regulation requires businesses working in the energy and minerals sector to secure approval from the Ministry for any transfers of shares, transfers of participating interest, as well as for any changes which are made to the composition of any board of directors and/or board of commissioners. Furthermore, the Regulation also alters a previous provision which related to the procurement of biodiesel fuel, as funded by the Palm-Oil Fund Management Agency.

With the aim of setting out further provisions on working areas for the indirect utilization of geothermal energy, the government has issued Regulation No. 37 of 2017, which encompasses the following matters: 1) Planning, preparation and establishment of working areas; (2) Additions of data to working areas; (3) Changes, cancellations and unifications in relation to working areas; and (4) Reinstatement of working areas.

The government is finally redefining the basic provisions for cost-recovery schemes as part of cooperation contracts held between oil-and-gas contractors and the government. Government Regulation No. 27 of 2017, which amends Government Regulation No. 79 of 2010 on Recoverable Operational Costs and Income-Tax Treatment in the Upstream Oil-and-Gas Business Sector, is expected to stimulate exploration and exploitation activities undertaken by contractors, which should eventually lead to an increase in oil-and-gas production in spite of the current downturn in global oil prices. The new regulation amends several provisions, including the scope of petroleum operations, production-sharing calculations, tax and non-tax incentives, recoverable and non-recoverable operational costs, goods depreciation, bookkeeping, overseas transactions and transitional provisions.

In a bid to clarify several matters pertaining to Ministry of Energy and Mineral Resources Regulation No. 34 of 2017 on Licensing Within the Minerals and Coal Sectors, the Ministry of Energy and Mineral Resources has finally issued Circular No. 10.E/30/DJB/2017 (?Circular?) on Following-up the Implementation of said Ministry Regulation. In essence, this circular addresses seven major points, specifically: (1) Cooperation with Other Parties; (2) Principle Licenses; (3) Changes to Articles of Association and Investment Status; (4) Ministry Authority; (5) Approval Documents on Working Plans and Budgets; (6) Technical Requirements; and (7) Transitional Provisions.

As part of the government?s 2017 priority-legislation program, the House of Representatives is now deliberating the Draft Bill on Palm Oil in a bid to create a more comprehensive framework for the Indonesian palm-oil sector. The draft bill addresses various matters; however, due to the broad scope of the bill, this edition of Indonesian Legal Brief (ILB) will confine its discussions to matters pertaining to palm-oil businesses, foreign ownership and criminal sanctions.

In order to clarify the role of independent verifiers regarding the process of verifying construction plans, as well as the physical progress of the construction of domestic refining facilities, the Ministry of Energy and Mineral Resource has issued Regulation No. 35 of 2017, which amends Ministry Regulation No. 6 of 2017 on Procedures and Requirements for the Granting of Recommendations for the Sale of Processed and Purified Minerals Overseas. In essence, the newly issued regulation redefines provisions pertaining to the export of washed bauxite, establishes a verification process to be implemented by independent verifiers, and also outlines the mandatory appointment of independent verifiers.

In a bid to optimize the utilization of flare gas produced by upstream oil-and-gas business activities, as well as to bolster national energy security, the Ministry of Energy and Mineral Resources has finally issued Regulation No. 32 of 2017 on the Utilization of and Sales Prices for Flare Gas as a Part of Upstream Oil-and-Gas Business Activities. This regulation basically redefines provisions which relate to the utilization of flare gas and which were previously regulated under Ministry Regulation No. 6 of 2016 on Provisions and Procedures for the Determination of Allocations, Utilization and Pricing for Natural Gas.

In a bid to attract more investors, the Ministry of Energy and Mineral Resources is aiming to simplify provisions relating to licenses within the minerals and coal-mining sectors through the issuance of Regulation No. 34 of 2017 on Licensing for the Minerals and Coal Sectors. This regulation basically unifies and redefines provisions which relate to the abovementioned areas, which were previously regulated only sporadically through five different regulations.