Working Areas for the Indirect Utilization of Geothermal Energy Further Regulated
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.
New Cost-Recovery Scheme for Oil-and-Gas Contractors Finally Regulated
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.
Detailed Provisions on New Mining Licensing Regime Issued
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.
Draft Bill on Palm Oil
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.
Govt. to Reregulate the Role of Independent Verifiers for Mineral Exports
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.
New Provision on Overlapping Applications for Timber-Product Utilization Permits
The Ministry of Environment and Forestry has issued Regulation No. P.32/MENLHK/SETJEN/KUM.1/5/2017 in a bid to overcome the problem of overlapping applications for the securing of Timber-Forest Product Utilization Permits (IUPHHK). The new application process will apply both to companies wishing to either secure new IUPHHKs or to extend their existing IUPHHKs. The new regulation also sets out new sanctions for any applications for IUPHHK which fail to settle the mandatory payment of fees within the due time.
Provisions on the Utilization of and Sales Prices for Flare Gas in Upstream Oil-and-Gas Business Activities Redefined
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.
New Provisions for Licensing Within the Minerals and Coal Sectors
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.
New Licensing Provisions for Oil-and-Gas Business Activities
With the ultimate aim of improving both the investment climate and productivity within the oil-and-gas sector, the Ministry of Energy and Mineral Resources has recently issued Regulation No. 29 of 2017 on the Licensing of Oil-and-Gas Business Activities. In essence, this regulation simplifies the licensing mechanism for the oil-and-gas sector and sets out several provisions which relate to license types, requirements for securing licenses, license validity periods and so forth.
New Provision for Parties to Working Mining Contracts
The Ministry of Energy and Mineral Resources has issued Regulation No. 28 of 2017, which amends Ministry Regulation No. 05 of 2017 on the Enhancement of the Added Value of Minerals Through Domestic Mineral Processing and Refinery Activities. This amendment redefines the transitional provision, specifically as it related to mining-business form conversion.