Power in Indonesia

Investment
and Taxation
Guide
November 2017 –
5th edition

www.pwc.com/id
DISCLAIMER: This publication has been prepared for general guidance on matters of interest only,
and does not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty (express or
implied) is given as to the accuracy or completeness of the information contained in this publication,
and, to the extent permitted by law, KAP Tanudiredja, Wibisana, Rintis & Rekan, PT Prima Wahana
Caraka, PT PricewaterhouseCoopers Indonesia Advisory, PT PricewaterhouseCoopers Consulting
Indonesia, or Melli Darsa & Co., Advocates & Legal Consultants, its members, employees and agents do
not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone
else acting, or refraining to act, in reliance on the information contained in this publication or for any
decision based on it.

Note:
Totals in tables and charts may not add due to rounding differences.

Regulatory information current to 20 September 2017

 Contents
Chapter Page

Glossary 4

Foreword 8

1 Overview of Indonesian Power Sector 12

2 Legal and Regulatory Framework 34

3 IPP Investment in Indonesia 56

4 Conventional Energy 78

5 Renewable Energy 104

6 Taxation Considerations 146

7 Accounting Considerations 162

Appendices 182

Map: Major Power Plants and

Transmission Lines 191
 The Government has ambitious goals for increasing the on-stream capacity of bioenergy power
plants from 2015 - 2019 as follows:

2015 2016 2017 2018 2019

Installed capacity – beginning of year 1,740 1,892 2,069 2,292 2,559
Biogas 46 43 76 101 126
State budget 1 1 1 1 1
Private 45 42 75 100 125
Biomass 77 76 87 97 107
State budget 1 2 2 2 2
Private 76 74 85 95 105
Municipal waste 29 58 60 69 80
Private 1 1 1 1 1
State budget 28 57 59 68 79
Installed capacity – end of year 1,892 2,069 2,292 2,559 2,872
Construction of bioenergy power plants 152 177 223 267 313
Source: RENSTRA KESDM 2015-2019

Pertamina has indicated that it is working with partners to develop biogas from POME in North
Sumatera in the Sei Mangkei Special Economic Zone, with biogas-to-electricity potential of
1.6 MW and with a tenant being the off-taker. This facility is targeted to reach its COD before
2020.

In March 2017, PLN signed MoUs for several bioenergy projects (see Table 5.9). In May 2017,
PLN also signed a PPA for a 9 MW biogas power project located in Bengkulu with PT Mitra
Puding Mas.102

Table 5.9 – Bioenergy project developments signed MoUs with PLN in March 2017

Type of Capacity
No. IPP/Developer Location
Bioenergy (MW)
Forest Waste PT Charta Putra Indonesia and
1 0.7 Mentawai, West Sumatera
(Biomass) IKPT
2 10.0 PT Cahaya Manggala Power Kobar, Central Kalimantan
3 10.0 PT Biogreen Power Kobar Kobar, Central Kalimantan
4 Palm Waste 10.0 PT Fajar Mitra Energi Sukamara, Central Kalimantan
(Biomass)
5 10.0 PT Intika Accord Power Sintang, West Kalimantan
PT Carpediem Elektrikal
6 10.0 Sintang, West Kalimantan
Nusantara

102 https://finance.detik.com/energi/d-3502834/6-pembangkit-di-kalimantan-bakal-sulap-cangkang-sawit-jadi-listrik

128 PwC
 Type of Capacity
No. IPP/Developer Location
Bioenergy (MW)
7 4.0 PT Pundi Global Investama Kubu Raya, West Kalimantan
8 10.0 PT Biomas Energy Abadi NAD
9 10.0 PT Subulussalam Green Energy Subulussalam, NAD
10 7.0 PT Pasadena Biofuels Mandiri Rokan Hulu, Riau
Biomass
11 5.0 PT Inhil Sarimas Kelapa Ssarimas, Indragiri Hilir, Riau
12 4.0 PT Sentosa Jaya Bersama N/A
13 3.0 PT Karya Energi Jambi Batanghari, Jambi
14 6.0 PT Energi Karya Persada N/A
15 10.0 PT Sentosa Jaya Purnama N/A
16 10.0 PT Rezeca Isa Bangko Sampurna, Rokan Hilir, Riau
17 Biogas 46.0 PTPN V Kampar, Riau
18 3.0 PT Pasadena Biofuels Mandiri Ujung Batu, Rokan Hulu, Riau
19 3.0 PT Green Energy Spesialist One Rumbai, Riau

Source: Detikcom, PwC Analysis

On 2 August 2017, PLN signed four biomass and five biogas PPAs ≤ 10 MW at tariffs between
IDR 889 and IDR 1,545/kWh (some of the 19 bioenergy projects that signed MoUs mentioned
on Table 5.9 also signed PPAs on that day). The applicable tariffs for such projects were based
on MoEMR Regulation No. 12/2017 (the MoUs and PPAs were signed before the issuance of
MoEMR Regulation No. 43/2017) (see Table 5.10).

Table 5.10 – Bioenergy projects that signed a PPA on 2 August 2017

Tariffs
Type of Capacity
No. IPP/Developer Location cUSD/ IDR/
Bioenergy (MW)
kWh kWh
Pagar Merbau, North
1 1 PTPN II 7.89 1,050
Sumatera
Kwala Sawit, North
2 1 PTPN II 7.89 1,050
Sumatera
Bangko Sampurna, Rokan
3 Biogas 10 PT Rezeca Isa 8.62 1,147
Hilir, Riau
PT Pasadena Biofiuels Ujung Batu, Rokan Hulu,
4 3 8.62 1,147
Mandiri Riau
PT Green Energy
5 3 Rumbai, Riau 8.83 1,175
Specialist One
PT Cipta Multi Listrik
6 10 Deli Serdang, N. Sumatera 7.89 1,050
Nasional
Sarimas, Indragiri Hilir,
7 5 PT Inhil Sarimas Kelapa 8.62 1,147
Biomass Riau
8 3 PT Karya Energi Jambi Mersam, Jambi 6.68 889
Energi Karya Persada,
9 6 PT Energi Karya Persada 11.61 1,545
Sumatera

Source: Official Letter of the MoEMR No. 5827/23/MEM.I./2017, PwC Analysis

Power in Indonesia: Investment and Taxation Guide 129

 Challenges to investment in bioenergy projects include the following:
a) The availability of biomass feedstock on a continuous and reliable basis;
b) The suitability of grid infrastructure or distance from grid connections;
c) The coordination required between PLN and various authorities (central and regional);
d) Permissions and licensing issues (land, water, environmental) and clarity at the regional
level on the associated fees and processes;
e) The availability of regional EPC contractors with the right experience and skills; and
f) The availability of spare parts and after-sales service.

5.5.1 Municipal Waste-to-Energy

Concerning the increase in waste production, the limited waste treatment capacity and the
capability of most landfill facility areas, municipal waste-to-energy is believed to be one of
the most effective solutions for waste management, which remains an unsolved problem in
many big cities in Indonesia. Similar to bioenergy in general, the feedstock used in this scheme
is municipal waste. However, in practice in the Indonesian context, the application of these
technologies is not simple. The waste produced in Indonesia is typically mixed and unsorted:
organic and non-organic waste, wet and dry garbage. Therefore, additional effort is needed
to manage this. Unsorted waste can be fed directly to the incinerator, but the high moisture
content of the waste reduces the thermal efficiency needed for complete combustion. The
potential of municipal solid waste production for electricity generation in selected cities/
regencies in Indonesia is presented in Table 5.11.

Table 5.11 – Municipal waste-to-energy potential per province in Indonesia

Municipal Waste Availability

Province Total Techno-Eco Potential (MW)
(Tonne/Year)
Aceh 15,741 0.94
North Sumatera 664,173 31.35
West Sumatera 143,509 7.14
Riau 122,640 7.69
Riau Islands 240,535 17.21
Jambi 39,858 1.63
Bengkulu 6,114 0.37
South Sumatera 187,976 12.24
Lampung 101,343 5.09
West Kalimantan 109,500 4.97
Central Kalimantan 44,713 1.83
South Kalimantan 73,000 3.48
East Kalimantan 192,082 8.84
Banten 206,681 13.09
West Java 3,508,138 227.59
Central Java 800,755 50.32
DI Yogyakarta 202,657 13.10
Bali 370,752 23.65
NTB 148,543 8.87
East Java 1,237,010 77.89

130 PwC