Mandatory Provisions for Power-Purchase Agreements Amended

The Ministry of Energy and Mineral Resources (“Ministry”) has issued Regulation No. 49 of 2017 (“Amendment”), which amends Ministry Regulation No. 10 of 2017 on Main Provisions for Power-Purchase Agreements (“Regulation 10/2017) [1] . The Amendment aims to offer greater certainty regarding the sale and purchase of electrical power by removing government force majeure from the list of risks that must be covered by sellers and buyers of electrical power. [2] The Amendment basically redefines two main provisions which address the scope of the risks that must be covered by sellers and buyers of electrical power (risk allocation), as well as the scope of force-majeure events.Risk AllocationAs a general rule, there are several risks that must be covered by independent power producers (“IPP”) as sellers of electrical power and by Indonesia’s State Electricity Company (PT Perusahaan Listrik Negara –“PT PLN”) as the buyer, as outlined in the relevant Power-Purchase Agreements (Perjanjian Jual Beli Tenaga Listrik–“PJBL”). [3] The Amendment has now removed the risk of government force majeure (i.e. risks due to changes in related government policies or regulations) from the list of risks which must be covered by both IPPs and PT. PLN. The comparison of risk allocation between the Amendment and Regulation 10/2017 is set out in the table below: [4]