The government has just introduced a new cooperation scheme for upstream oil-and-gas businesses (Contractors), which it has named the gross-split scheme, through Ministry of Energy and Natural Resources Regulation No. 8 of 2017 on Gross-Split Production-Sharing Contracts. The new scheme no longer adopts a cost-recovery regime but instead opens up the possibility of several adjustments being made in order to ensure the stability of a contractor?s business. The government is of the belief that a gross-split scheme may ultimately improve national oil-and-gas production and be of benefit to Contractors, in spite of the current global turmoil within the industry.

Government Regulation No. 1 of 2017 on the Fourth Amendment to Government Regulation No. 23 of 2010 on the Implementation of Mineral and Coal-Mining Activities has been highly anticipated by mining companies operating at all levels. In addition to updating provisions which relate to the extension of mining-business permits and the sale of minerals and coal, the recently-issued amendment has also been highly anticipated due to the fact that it amends the previous provisions on the divestment obligation for foreign mining companies, as well as the refinery obligation, which encompasses exports of mineral concentrate.

The Ministry of Energy and Mineral Resources has issued Regulation No. 36 of 2016 on the Accelerated Implementation of a National Single Price for Certain Types of Oil Fuel and Types of Specially-Assigned Oil Fuel, which is as an implementation of the Single Fuels Price Policy initiated by President Joko Widodo. The Regulation obliges designated business entities to appoint distributors in remote areas for the distribution of gas oil, kerosene and RON 88 gasoline at a single price, as determined by the Ministry.

The Ministry of Energy and Mineral Resources has issued Regulation No. 28 of 2016 on Electrical Power Tariffs Set by the State Power Company. This Regulation basically renews the electrical power tariffs and tariff adjustments which were previously regulated under Ministry Regulation No. 31 of 2014 on Electrical Power Tariffs Set by the State Power Company, as amended by Ministry Regulation No. 9 of 2015. This regulation is of relevance to all businesses as well as to members of the general public who are the users of the electrical power generated by PLN.

With the aim to establish guidelines to promote the development and empowerment of communities that are located in proximity to mining areas, the Ministry of Energy and Mineral Resources has issued Regulation No. 41 of 2016 on the Development and Empowerment of Communities Through Activities of the Mineral and Coal Mining Sectors. These guidelines encompass provisions concerning the blueprint, master plan and annual programs to be implemented by mining companies in order to support community development and empowerment. Regulation No. 41 of 2016 also creates reporting obligations for mining companies, and establishes administrative sanctions for non-compliance

The Ministry of Energy and Mineral Resources has issued Regulation No. 37 of 2016 on Provisions for Offering 10% Participation Interest in Oil-and-Gas Working Areas. This Regulation sets out the process whereby oil-and-gas companies can offer 10% participating interests in their approved working areas to Regionally Owned Companies or State-Owned Companies.

The petition to review several articles set out under Law No. 30 of 2009 on Electricity submitted by the Labor Union Board of the State Power Company (PT PLN) has been partially accepted by the Constitutional Court (MK). This court decision emphasizes the fact that unbundling activities and the procurement of electricity by the private sector run contrary to the national Constitution (UUD 1945) if it is implemented or constructed in a way which ultimately resulted in the State losing its control rights.

In a bid to increase the production of renewable energy and to escalate the development of 35,000 MW power plants which will utilize renewable resources, the Ministry of Finance has issued Regulation No. 172/PMK.010/2016, which allows the Ministry to grant land-and-building-tax deductions to any taxpayers who are engaged in geothermal business/mining activities which are still at the exploration stage. In essence, this regulation sets out the basis and period for the granting of any such deductions.

The Ministry of Energy and Natural Resources recently issued Regulation No. 35 of 2016 on the Implementation of Domestic Oil-Refinery Construction by Private Companies (?Regulation 35/2016?) in order to safeguard the country?s fuel supply, to increase national fuel production volumes, to reduce dependency upon fuel imports, and to hopefully eventually achieve energy security. In order to do so, Regulation 35/2016 sets out the legal framework for optimizing the participation of private companies during the construction of domestic oil refineries, including: (1) Eligibility and requirements for such private companies; (2) Support for any construction?s economic-feasibility enhancements; (3) Fulfillment of domestic need and fuel distribution; and (4) Oversight measures.

The Ministry of Energy and Mineral Resources has issued Regulation No. 30 of 2016 (Amendment) which amends Regulation No. 15 of 2015. This Regulation further clarifies the various measures which can be taken by PT Pertamina or by new oil-and-gas contractors when taking over the management of existing working areas. It is hoped that the Amendment will be able to achieve smoother transition periods between new and former contractors, and that this will ultimately lead to greater stability in oil-and-gas production in the working areas in question.