New Local Content Regime for Electricity Infrastructure Development in Indonesia
14 August 2024
![power grid](https://ashurstcd.azureedge.net/-/media/Ashurst/Images/SXA-insights-heroes/R009046_Insights-Energy-Transiton-2-1440x450.jpg?h=450&w=1440&rev=12efc988602447ad87100f97de0b5e6d&hash=C78EFFEBD5F89E216295214411D8D552)
14 August 2024
In a significant regulatory shift, the Ministry of Energy and Mineral Resources (MEMR) and the Ministry of Industry (MOI) have introduced 4 new regulations that overhaul the local content requirements for the development of electricity infrastructure for public interest in Indonesia (Electricity Infrastructure).
For the last decade, the development of Electricity Infrastructure (including by independent power producers (IPPs)) was required to use certain levels of domestic goods and services. The main regulatory basis for these requirements lied in MOI Regulation No. 54/M-IND/PER/3/2012 (MOI 54/2012) which set specific minimum local content thresholds for goods and services in the development of Electricity Infrastructure. The intent of these local content requirements was to incentivize the development of local supply chains of critical goods and services in support of the development of Electricity Infrastructure. Notwithstanding this laudable objective, the restrictive and inflexible local content requirements under MOI 54/2012 combined with the relatively slow growth of competitive domestic supply for certain key components posed significant challenges to IPPs and private developers to be able to fulfil these requirements, leading in turn to uncertainties and bankability challenges. Against this backdrop which has been hampering the deployment of mainly renewable energy projects across the vast Indonesian archipelago, MOI addressed in May 2024 a letter to the Coordinating Ministry for Maritime and Investment Affairs (Marves), indicating its plan to revoke MOI 54/2012 and suggesting that MEMR should instead be the appropriate authority to regulate local content for the electricity sector.
On 31 July 2024, MEMR enacted Regulation No. 11 of 2024 on the Use of Domestic Products for the Development of Electricity Infrastructure (MEMR 11/2024). On the same day, MOI also enacted 2 further regulations:
i. Regulation No. 33 of 2024, which formally revokes MOI 54/2012; and
ii. Regulation No. 34 of 2024 on the Procedures for Calculation of the Value of Domestic Components of Solar Module Products (MOI 34/2024), which revokes MOI Regulation No. 04/M-IND/PER/2/2017 on the Conditions and Procedures for Calculation of the Value of Domestic Components of Solar Power Plants.
A few days later, on 6 August 2024, MEMR issued Decree No. 191.K/EK.01/MEM.E/2024 on the Minimum Domestic Component Threshold for Combined Goods and Services in the Scope of Electricity Infrastructure Development Projects (MEMR Decree 191/2024) which sets out the minimum local content thresholds for each type of Electricity Infrastructure. Notably, the new thresholds under MEMR Decree 191/2024 are significantly lower than those that were stipulated under MOI 54/2012 for the past 12 years. We have included as an appendix to this article an overview of these thresholds and a comparison against the previous regime.
These new regulations mark the beginning of a new era for local content in the public Electricity Infrastructure sector in Indonesia and are expected to create a more conducive investment environment to accelerate the much-needed development of renewable energy power projects (REPPs) and supporting infrastructure in the country. In this article, we outline the key requirements introduced by MEMR 11/2024 and highlight the most significant changes from the previous regime under MOI 54/2012 and also offer insights on how these new requirements might impact the market for investors and financiers.
MEMR 11/2024 requires the use of domestic goods and services (Local Content Requirement) in the development of the following types of Electricity Infrastructure.1
Additionally, the new regulation states that the Electricity Infrastructure for certain types of REPPs (specifically hydro, geothermal, solar and wind) also includes the survey activities to help develop the renewable energy resources, which therefore also need to comply with the Local Content Requirement.
MEMR 11/2024 provides that the Local Content Requirement applies to Electricity Infrastructure development undertaken by the following parties:2
Remarks on the scope of the new regime: Similar to MOI 54/2012, the Local Content Requirement under MEMR 11/2024 applies to electricity infrastructure for public interest, meaning that captive electricity infrastructure will not be subject to this regulation. However, the scope of MEMR 11/2024 is now broader compared to MOI 54/2012 which set the local content thresholds only for hydro, geothermal, solar, coal-fired, gas, and combined cycle power projects, whereas MEMR 11/2014 now also covers wind, biomass, biogas and waste-to-energy projects. Further, MOI 54/2012 generally stipulated that the local content requirement applied to the development of Electricity Infrastructure by SOEs, ROEs, private business entities, or cooperatives funded by the state budget, regional budget, or foreign grants or loans, whereas MEMR 11/2024 now also covers projects that are implemented in cooperation with the government and/or if a party in the project utilizes resources controlled by the state.
It is worth noting that the requirements set out in Article 3(2) of MEMR 11/2024 are the same as the general local content requirements set out in Article 57 of Government Regulation No. 29 of 2018 on Empowerment of Industry (GR 29/2018), which is one of the legal bases of MEMR 11/2024. The elucidation of Article 57 of GR 29/2018 clarifies that the term "utilizes resources controlled by the state" (limb c of "Business Entities" above) refers to:
Based on the elucidation above, it is clear that IPPs that sell their electricity to PT PLN (Persero) (PLN) will be subject to the Local Content Requirement since PLN is an SOE and the offtake and tariff payment by PLN is to be considered as utilization of resources controlled by the state.
MEMR 11/2024 mandates that the Local Content Requirement be included in procurement documents for Electricity Infrastructure.3 Similar to the provisions under MOI 54/2012, the fulfilment of the Local Content Requirement is to be determined based on the local content value of each good and/or service in relation to the relevant type of Electricity Infrastructure project consisting of:4
i) any applicable local content thresholds for goods;
ii) any applicable local content thresholds for services; and
iii) a local content threshold for goods and services combined (Combined Local Content Threshold).
The specific local content threshold for goods and services is to be based on relevant industrial sector regulations, especially from MOI, whereas the minimum Combined Local Content Threshold in Electricity Infrastructure is now to be stipulated by MEMR. Such Combined Local Content Threshold will be determined by comparing the total price of (i) domestic components of the goods, plus (ii) domestic components of the services, against the total price of the components of the goods and services.
Infrastructure is now to be stipulated by MEMR. Such Combined Local Content Threshold will be determined by comparing the total price of (i) domestic components of the goods, plus (ii) domestic components of the services, against the total price of the components of the goods and services.
As an immediate implementing regulation to MEMR 11/2024, on 6 August 2024 MEMR issued Decree 191/2024 which stipulates the minimum Combined Local Content Threshold for each type of Electricity Infrastructure within the scope of MEMR 11/2024.
In general, the new thresholds under MEMR Decree 191/2024 are significantly lower than those which prevailed under MOI 54/2012. For power plants, the thresholds are mostly below 30%, except for hydro plants with installed capacities of up to 10 MW (40%) and 19 MW-50 MW (35%). Solar power plants are now subject to a 20% minimum Combined Local Content Threshold, which is less than half the previous threshold. Regarding transmission networks and substations, the Local Content Requirement also involves lower thresholds and now only applies to high voltage of 150 kV and above (whereas it previously applied from 70 kV upwards). Significant reductions can also be observed in relation to Extra High Voltage Transmissions of 500 kV (from 74.59% to 38.13%) and Extra High Voltage Substations of 500 kV (from 42.77% to 13.28%). Please refer to the Appendix of this article for an overview of the minimum Combined Local Content Threshold under MEMR Decree 191/2024 across the different types of Electricity Infrastructure, and a comparison against the thresholds under MOI 54/2012.
It is worth noting that the fifth dictum of MEMR Decree 191/2024 clarifies the decree applies retroactively as of 31 July 2024.
The stipulated minimum Combined Local Content Threshold shall be evaluated by MEMR periodically, at least once every three years or as necessary. If the evaluation concludes that changes to the minimum Combined Local Content Threshold are required, MEMR shall make the necessary adjustments by issuing an update to the then applicable Combined Local Content Threshold regulation.5
The realization of the minimum Combined Local Content Threshold requires a verification by an authorized independent verification agency. The verification must be completed before the "handover" of the Electricity Infrastructure project. The results of such process must then be submitted to the Director General of New, Renewable Energy, and Energy Conservation (DGNRE) for REPPs, or to the Director General of Electricity (DGE) for other types of electricity infrastructure (such as thermal plants or grid infrastructure).
The new regime also provides for sanctions and rewards related to compliance with the applicable Local Content Requirement (see further detail on this below).6
Developers may also conduct a pre-assessment of the local content threshold by an independent verification agency during the project planning phase.7 This pre-assessment is a new mechanism introduced by MEMR 11/2024.
Remarks on changes against MOI 54/2012: Previously, under MOI No. 54/2012, goods and services providers were allowed to self-assess their compliance with Local Content Requirements. Project owners then had the option to request further confirmation by engaging an independent surveyor or a verification agency during the tender phase or throughout the contract execution. In contrast, MEMR 11/2024 now mandates a formal verification process to confirm the achievement of the minimum Combined Local Content Threshold which must be completed before the Electricity Infrastructure is "handed over". Although MEMR 11/2024 does not provide clarity on which specific "handover" it refers to, our view is that this should refer to the handover of the project as per the EPC contract prior to the commercial operation date (COD) of the relevant Electricity Infrastructure. This would align with recent trends observed in PLN power purchase agreements (PPAs), where local content verification is required to be provided by IPPs before COD, with the local content certificate to be submitted after COD. Though it is unclear which government institution will issue the local content certificate following the issuance of MEMR 11/2024, as this is not specifically regulated, the local content certificates were previously issued by MOI and therefore, it is likely that the certificate now will be issued by MEMR in light of MEMR 11/2024.
One major change introduced by the new regime under MEMR 11/2024 is that several types of exceptions to the fulfilment of the Local Content Requirement are now available.
1. General Exceptions
Similar to the position under the previous regime of MOI 54/2012, the import of goods for electricity infrastructure development is generally allowed under the following conditions:
a) the goods are not produced domestically;
b) the technical specifications of domestically produced goods do not meet the project requirements; and/or
c) domestic production cannot meet the demand as confirmed by the relevant manufacturer or association of manufacturers.
The fulfilment of any of the above conditions must be verified by an independent verification agency.
2. Exception for Projects Funded by Foreign Loans or Grants
MEMR 11/2024 provides that Electricity Infrastructure projects funded by foreign loans or grants are subject to the Local Content Requirement unless otherwise specified in the foreign loan or grant agreement. MEMR 11/2024 stipulates that "foreign loans or grants" in the context of this exception are those fulfilling the following cumulative conditions:9
Such potentially qualifying foreign loans or grants consist of:
a) foreign grant agreements in the form of grants to the government, grants channelling through the government, or direct grants to business entities (such as IPPs); or
b) foreign loan agreements in the form of loans to the government, loan channelling through the government, or direct loans with or without government guarantees to business entities.
Remarks on the new exception: The exception for Electricity Infrastructure projects funded by foreign loans or grants represents a major change to the previous regime which required developers to attempt securing exemptions on the basis of the "General Exceptions" criteria which left a high level of discretion and subjectivity to local associations of manufacturers and, as a result, put PLN and MOI in the difficult position of having to justify any exemptions granted. The new exception for certain types of foreign loans or grants is aimed at facilitating the channelling of concessional financing to Indonesian IPPs which are often tied to certain conditions imposed by the relevant financial institutions (pursuant to their internal lending policies) including often that the relevant project not be subject to local preference / content requirements.
It should be noted that this exception only applies to foreign financings where:
Furthermore, it is important to highlight that a further condition to this exception is that the relevant Electricity Infrastructure project that is a beneficiary of such offshore loans or grants should wholly or partially fulfil domestic electricity needs. Although the regulation does not provide context as to the interpretation to be given to this additional requirement, our view is that this should be read in conjunction with the specific Local Content regime for electricity export projects (see more detail on this further below) which, as a consequence, means that an export project cannot qualify for this exception unless the export project were to partly fulfil domestic needs. It would then need to be seen whether the exception would fully apply to the project or only to the domestic offtake component. MEMR 11/2024 does not shed light on this and hopefully specific provisions will soon provide the clarity necessary for the development of these large and complex projects.
Besides the general principles set out above which are applicable to all types of Electricity Infrastructure development, MEMR 11/2024 also stipulates certain requirements for specific projects, as follows:10
The use of domestic goods and services for Electricity Infrastructure intended for cross-border electricity sales are to comply with a certain minimum threshold of local content which will be stipulated separately by MEMR.
Solar Power Plants that:
may be granted "relaxation" from the Local Content Requirement until 30 June 2025.
The relaxation is subject to the following conditions:
a) the list of solar power plants eligible for the relaxation will be determined through a coordination meeting organized by the coordinating minister responsible for energy affairs (currently Marves).
b) the qualifying solar power plants shall use either solar modules assembled domestically or solar modules imported entirely by:
1. domestic solar module manufacturers; and/or
2. foreign solar module manufacturers that have committed to (i) investing in the production of solar modules in Indonesia, and (ii) meeting the local content production requirements for solar modules as per the relevant industrial regulations; and
3. the completion of the solar module production facility which fulfils the relevant local content requirement is to be achieved by no later than 31 December 2025.
The aforementioned investment and production commitments must be stated in a commitment letter from the manufacturer to be submitted to MEMR and MOI. Failure to fulfill these commitments will entitle the developer to blacklist the manufacturing company.
Remarks on the specific local content requirements for solar and export projects:
The new provisions allowing for a relaxation of Local Content Requirements for solar power projects meeting specific criteria are aimed at providing much needed flexibility for the procurement of goods (and especially solar modules) for a fairly large number of solar projects which are currently at tender stage or about to be tendered, and which would struggle to fulfil the mandated Local Content Requirement in light of the limited domestic tier 1 solar panel production capacity.
Despite this objective, we note that:
As regards the specific Local Content Requirement for cross-border electricity trading projects which is enshrined in MEMR 11/2024, this reference seems, albeit indirectly, to now confirm that these projects are indeed part of the Government's Electricity Infrastructure development plans. However, given that the applicable local content threshold has not yet been issued11, it is difficult to comment in a meaningful way at this stage on the potential impact of the requirement on these projects from a feasibility and costing perspective.
MEMR 11/2024 also introduces a mandate to MEMR through DGNRE (for REPPs) or DGE (for other infrastructure) to pursue the following steps to promote and incentivize the development of local manufacturing capacity and services:
i) a roadmap for achieving the Combined Local Content Threshold for Electricity Infrastructure projects;12 and
ii) a Domestic Product Appreciation Book (Buku Apresiasi Produk Dalam Negeri) containing lists of goods, goods manufacturers and service providers categorized as mandatory, maximized and empowered to be used for local content fulfilment.13
In addition, MEMR may implement a price preference mechanism as further support for the utilization of domestic goods and services. The price preference would consist in a value adjustment or price normalization that will be applied to the bid price during the procurement process of goods and/or services for Electricity Infrastructure projects (which presumably includes IPP projects). DGNRE and DGE are mandated to develop further detailed provisions in relation to this price preference mechanism which applies in a number of other markets.14
Developers (including IPPs) who fail to fulfil the minimum Combined Local Content Threshold for Electricity Infrastructure may be subject to the following administrative sanctions:15
i) written warnings;
ii) temporary suspension (of business activities);
iii) administrative fines; and/or
iv) revocation of the electricity supply business license for public interest (IUPTLU).
On the other hand, in a move to incentivize compliance, developers/IPPs who meet the minimum Combined Local Content Threshold for Electricity Infrastructure may be granted certain rewards. These may be in the form of a certificate of appreciation, announcement in mass media and/or other types of rewards which would have to be determined in further implementing regulations from MEMR 11/2024.16
Remarks on sanctions: MEMR 11/2024 does not provide detailed guidance on the imposition of administrative sanctions, stating only that they shall be implemented in accordance with applicable regulations. It is unclear which specific regulations MEMR 11/2024 is referencing (i.e., regulations in the electricity sector or the industrial sector?).
For instance, Article 53 of Government Regulation No. 25 of 2021 on the Organization of the Energy and Mineral Resources Sector (GR 25/2021), which implements Law No. 30 of 2009 on Electricity and one of the legal bases of MEMR 11/2024, requires all parties in the electricity sector to prioritize domestic products and resources, including by fulfilling Local Content Requirements. Article 55 of GR 25/2021 provides that violations of this requirement are subject to the same administrative sanctions as outlined in MEMR 11/2024. These sanctions include a series of written warnings, followed by a possible temporary suspension of activities for up to 6 months. If obligations remain unfulfilled after this suspension, fines may be imposed for up to 3 months, without exempting the person from having to fulfill their obligations. However, if obligations are still not fulfilled after the fine period, the business license may the be revoked. We note that the amount of fine is not specifically regulated under GR 29/2018.
The sanctions provisions under MEMR 11/2024 differ from those in MOI 54/2012. Under the previous regime, it was clearly stipulated that administrative sanctions include written warnings for non-compliance and blacklisting for two years in cases of more serious violations. Financial sanctions could also be imposed if the verified local content at the end of the project was less than what was agreed upon in the contract (such as the PPA), calculated at 0.3 per mil of the contract value for every 0.01% shortfall, with a maximum penalty of 10% of the contract value. If the shortfall exceeded 5%, both maximum financial sanctions and blacklisting may be imposed. These sanctions were to be enforced at the completion of the relevant project (i.e. a COD and based on the outcome of the verification by the appointed independent surveyor). It will have to be seen if MEMR will regulate this aspect the local content regime in further detail and re-introduce specific fine amounts and thresholds.
MEMR 11/2024 provides that upon the regulation coming into effect (i.e. 31 July 2024):17
Remarks on the applicability of MEMR 11/2024: The transitional provisions of MEMR 11/2024 provide important implications for ongoing and planned Electricity Infrastructure projects. Specifically, projects previously regulated under MOI 54/2012 (detailed in limb 1 above), which have been in planning, construction, or commercial operation since 2021 but have not yet been verified by an independent agency, must now comply with the Local Content Requirement set out in MEMR 11/2024. The cut-off in 2021 could be a reference to projects listed in PLN's Electricity Supply Business Plan (RUPTL) lastly issued in October 2021. Given the general relaxation of the local content regime under MEMR 11/2024 (including the minimum thresholds), this should entail that these projects will be bound by lower local content thresholds than they previously were.
Conversely, wind, biomass, biogas, waste-to-energy, gas engine, and distribution network projects which were previously not covered under MOI 54/2012, will not be subject to Local Content Requirement stipulated in MEMR 11/2024 if they were already in the planning or construction stages or had reached commercial operation as of 31 July 2024 which affords the necessary grandfathering and legal certainty to these projects.
The local content value of goods to be calculated as part of the Combined Local Content Threshold is to be determined based on the relevant industrial sector regulations. The newly enacted MOI 34/2024 specifies that the local content value for solar modules is to be calculated based on certain production factors, consisting of:18
i) Direct materials, which are given a weighting of 91% of the value. The local content value of direct materials will also be calculated by weighting each component, such as solar cells (with a weighting of 50% of the direct materials value) and solar silicon (2% of the direct materials value).19
ii) Direct labour, which is given a weighting of 5% of the value and will be based on the percentage of Indonesian workers in the total direct work force.20
iii) Factory overhead, which is given a weighting of 4% of the value and will be based on the percentage of domestic factory overhead costs.21
The form to calculate the local content value for solar module products is appended to MOI 34/2024.
The new regulations on local content for Electricity Infrastructure development in Indonesia bring several important changes and implications for the Indonesian electricity sector and all market participants.
Although MEMR 11/2024 effectively expands the scope of Local Content Requirement to include a wider range of technologies and projects (such as wind, biomass, biogas, waste-to-energy, and gas engine power plants) which were previously not covered under MOI 54/2012, most other changes bring much needed relaxation (especially in terms of the applicable thresholds), flexibility and clarity to the requirements and exemptions from the requirements.
This important and long-awaited reform should lead to a more conducive environment for investments and allow to unlock the large potential of untapped resources which the archipelago holds and support its path towards its energy transition. In particular, the introduction of clear exceptions for projects funded by offshore loans or grants offers a potential solution to the challenges faced by DFIs and other multilateral agencies to channel funding to government and private Electricity Infrastructure projects. For example, we understand that the previous rigid and somewhat outdated (or out of sync with market) regime under MOI 54/2012 was one of the main hurdles for the achievement of significant progress in the deployment of funding committed as part of the Indonesian JETP22.
Overall, despite remaining uncertainties as to the interpretation and implementation of certain provisions of the new regime (especially in relation to the interim relaxation for solar projects and the yet uncertain threshold and requirements for export projects), this reform is clearly a step in the right direction and will be welcome by private sector developers (both foreign and domestic) as well as the international lending community.
We set out below the minimum Combined Local Content Thresholds stipulated under MEMR Decree 191/2024 for each type of Electricity Infrastructure compared against the previously applicable thresholds stipulated under MOI 54/2012.
Electricity Infrastructure |
Minimum Combined Local Content Threshold (Goods and Services) |
|
MEMR Decree 191/2024 |
MOI 54/2012 |
|
Coal-fired Power Plant |
Installed capacity: 1. up to 600 MW: 27.18% 2. over 600 MW: 18.83% |
Installed capacity: 1. up to 15 MW per unit: 70.79% 2. 15-25 MW: 49.09% 3. 25-100 MW: 44.14 4. 100-600 MW: 40.00% 5. more than 600 MW: 38.21% |
Gas-fired Power Plant |
10.39% |
Installed capacity up to 100 MW: 48.96% |
Combined Cycle Power Plant |
21.93% |
Installed capacity: 1. up to 50 MW: 47.88% 2. 50-100 MW: 40% 3. 100-300% MW: 34.76% 4. more than 300 MW: 30.22% |
Gas Engine Power Plant |
23.96% |
Not stipulated |
Geothermal Power Plant |
Installed capacity: 1. up to 60 MW: 24% 2. more than 60 MW: 29% 3. partial/separated geothermal project: 20% |
Installed capacity: 1. up to 5 MW: 42.00% 2. 5 MW-10 MW: 40.45% 3. 10 MW – 60 MW: 33.24% 4. 60 MW – 110 MW: 29.21% 5. more than 110 MW: 28.95% |
Hydro Power Plant |
Installed capacity: 1. up to 10 MW: 45% 2. 10 MW-50 MW: 35% 3. more than 50 MW: 23% |
Installed capacity: 1. up to 15 MW: 70.76% 2. 15 MW-50 MW: 51.60% 3. 50 MW-150 MW: 49.00% 4. more than 150 MW: 47.60% |
Solar Power Plant |
20% |
Distributed solar power plant: 45.90% Stand-alone centralized solar power plant: 43.72% Connected centralized solar power plant: 40.68% |
Wind Power Plant |
15% |
Not stipulated |
Biomass Power Plant | 21% |
Not stipulated |
Biogas Power Plant |
25.19% | Not stipulated |
Waste to Energy Power Plant |
16.53% |
Not stipulated |
Transmission Network |
1. High Voltage Overhead Line 150 kV: 60.71% 2. Extra High Voltage Overhead Line 275 kV: 65.65% 3. Extra High Voltage Overhead Line 500 kV: 38.13% 4. High Voltage Ground Cable Line 150 kV: 56.40% |
1. High Voltage Overhead Line 70 kV: 76.17% 2. High Voltage Overhead Line 150 kV: 76, 17% 3. Extra High Voltage Overhead Line 275 kV: 74.59% 4. Extra High Voltage Overhead Line 500 kV: 74.59% 5. High Voltage Sea Cable Line 150 kV: 28.60% 6. High Voltage Ground Cable Line 70 kV: 56.40% 7. High Voltage Ground Cable Line 150 kV : 56.40% |
Substation |
1. High Voltage Substation 150 kV: 39.87% 2. Extra High Voltage Substation 275 kV: 24.79% 3. Extra High Voltage Substation 500 kV: 13.28% 4. Gas Insulated Switchgear (GIS) High Voltage 150 kV: 12.95% 5. Gas Insulated Switchgear (GIS) Extra High Voltage up to 500 kV: 17.38% |
1. High Voltage Substation 70 kV: 65.14% 2. High Voltage Substation 150 kV: 64.39% 3. Extra High Voltage Substation 275 kV: 43.27% 4. Extra High Voltage Substation 500 kV: 42.77% 5. High Voltage GIS 150 kV: 19.237% 6. Extra High Voltage GIS 150 kV: 17.389% |
In addition to the combined thresholds listed above, MEMR Decree 191/2024 also stipulates the list of goods and services components for each type of Electricity Infrastructure which will be part of the calculation of the level of local content. Dictum three of MEMR Decree 191/2024 states that the local content of each component will serve as the basis for calculating the applicable minimum Combined Local Content Threshold.
Electricity Infrastructure |
Goods and Services Components |
Coal-fired Power Plant |
Steam turbine, boiler, generator, electrical, instrument and control, balance of plant and/or civil and steel structure, consultant services (feasibility study), integrated construction services (engineering, procurement, and construction), inspection services, testing services, certification and/or supporting services. |
Gas-fired Power Plant |
Gas turbine, generator, electrical, instrument and control, balance of plant and civil and steel structure, consulting services (feasibility study), integrated construction services (engineering, procurement, and construction), inspection services, testing services, certification and/or supporting services. |
Combined Cycle Power Plant |
Gas turbine, generator, heat recovery steam generator (HRSG), steam turbine, electrical, instrument and control, balance of plant, and civil and steel structure, consulting services (feasibility study), integrated construction services (engineering, procurement, and construction), inspection services, testing services, certification and/or supporting services. |
Gas Engine Power Plant |
Gas engine, generator, fuel supply, electrical, instrument and control, balance of plant, dan civil and steel structure, supporting material, consulting services (feasibility study), integrated construction services (engineering, procurement, and construction), inspection services, testing services, certification and/or supporting services. |
Geothermal Power Plant |
Civil work, well drilling, fluid collection and reinjection system (steam production facilities and brine reinjection), power plants, interconnection networks, survey services, consultant services (feasibility study), FEED services, integrated engineering, procurement, and construction (EPC) construction services, inspection services, testing services, certification services and/or supporting services. |
Hydro Power Plant |
Civil, metalwork, electro-mechanical, electrical, instrument and control, interconnection equipment/network, consulting services (feasibility study, detailed engineering design, survey), construction services (engineering, procurement, and construction), delivery services, and/or supporting services (including licensing, certification, testing, inspection and/or other services). |
Solar Power Plant |
Solar modules, inverters, support structure/mounting modules, cables and wiring, balance of system (including: batteries, distribution panels, combiner boxes, transformers and others - adjusted to the configuration of offgrid or ongrid PLTS), protection systems, and interconnection equipment/networks, consulting services (feasibility study, detailed engineering design, survey), construction services (engineering, procurement, and construction), delivery services, and/or supporting services (including licensing, certification, testing, inspection and/or other services). |
Wind Power Plant |
Civil, metalwork, electro-mechanical, electrical, instrument and control, balance of system (including: battery, distribution panel, transformer, and protection system, etc. - adjusted to the plant configuration), interconnection equipment/network, consultant services (feasibility study, detailed engineering design, survey), construction services (engineering, procurement, and construction), delivery services and/or supporting services (including licensing, certification, testing, inspection and/or other services). |
Biomass Power Plant |
a) Direct materials and equipment: purchase price of direct materials or finished goods (boilers, generators, pressure vessels, pumps, and other machines), procurement costs, shipping, import duties and taxes, loading and unloading, handling and transportation, insurance, receiving and inspection costs, and/or royalties; b) Project management and engineering: labour, work facilities, consumables costs, and/or indirect project costs (overhead); c) Work tools and work facilities: equipment rental (crane, forklift), work equipment, and/or building/land for work facilities; d) Construction and fabrication costs: mobilization/demobilization, labour costs, consumables costs, and/or work equipment; and/or e) General services: insurance, licenses and patents, utilities, maintenance and repair of spare parts, quality assurance, OHS and/or indirect factory costs (gas, diesel, lubricants, coolants, hydraulic oil). |
Biogas Power Plant |
a) Direct materials and equipment: purchase price of direct materials or finished goods (boilers, generators, pressure vessels, pumps, and other machines), procurement costs, shipping, import duties and taxes, loading and unloading, handling and transportation, insurance, receiving and inspection costs, and/or royalties; b) Project management and engineering: labour, work facilities, consumables costs, and/or indirect project costs (overhead); c) Work tools and work facilities: equipment rental (crane, forklift), work equipment, and/or building/land for work facilities; d) Construction and fabrication costs: mobilization/demobilization, labour costs, consumables costs, and/or work equipment; and/or e) General services: insurance, licenses and patents, utilities, maintenance and repair of spare parts, quality assurance, OHS and/or indirect factory costs (gas, diesel, lubricants, coolants, hydraulic oil). |
Waste-to-Energy Power Plant |
a) Direct materials and equipment: purchase price of direct materials or finished goods (boilers, generators, pressure vessels, pumps, and other machines), procurement costs, shipping, import duties and taxes, loading and unloading, handling and transportation, insurance, receiving and inspection costs, and/or royalties; b) Project management and engineering: labour, work facilities, consumables costs, and/or indirect project costs (overhead); c) Work tools and work facilities: equipment rental (crane, forklift), work equipment, and/or building/land for work facilities; d) Construction and fabrication costs: mobilization/demobilization, labour costs, consumables costs, and/or work equipment; and/or e) General services: insurance, licenses and patents, utilities, maintenance and repair of spare parts, quality assurance, OHS and/or indirect factory costs (gas, diesel, lubricants, coolants, hydraulic oil). |
Transmission Network, Substations, and Electricity Distribution Network |
Direct materials (raw materials) and equipment (finished goods), project management and engineering, work tools, construction and fabrication, and general services. |
Authors: Frédéric Draps, Partner / Foreign Legal Consultant; Jean-Louis Neves Mandelli, Partner; Alfred Ng, Partner and Khairunissa Yuliandhini, Associate.
1. Articles 2 and 3(1) of MEMR 11/2024.
2. Article 3(2) of MEMR 11/2024.
3. Article 4(1) of MEMR 11/2024.
4. Article 8 of MEMR 11/2024.
5. Article 9 of MEMR 11/2024.
6. Article 10 of MEMR 11/2024.
7. Article 11 of MEMR 11/2024.
8. Article 4(2)-(5) of MEMR 11/2024.
9. Article 17 of MEMR 11/2024.
10. Articles 18 and 19 of MEMR 11/2024.
11. As at the date of this article, market intelligence suggested that a 60% Combined Local Content Threshold may apply to these projects. This obviously remains to be confirmed through official channels and reflected in appropriate regulation to be issued by MEMR, and it would need to be seen whether such threshold can be fulfilled in practice in the next few years in light of the limited tier 1 solar panel domestic production capacity.
12. Article 5 of MEMR 11/2024.
13. Article 6 of MEMR 11/2024.
14. Article 7 of MEMR 11/2024.
15. Article 12 of MEMR 11/2024.
16. Article 14 of MEMR 11/2024.
17. Articles 20-21 of MEMR 11/2024.
18. Article 2 of MOI 34/2024.
19. Article 3 of MOI 34/2024.
20. Article 4 of MOI 34/2024.
21. Article 5 of MOI 34/2024.
22. Just Energy Partnership.
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