New Procedures for the Granting of Government Guarantees for the Acceleration of Electrical Infrastructure Development

The Ministry of Finance (“Ministry”) has issued Regulation No. 130/PMK.08/2016 on Procedures for the Granting of Government Guarantees for the Acceleration of the Development of Electrical Infrastructure (“2016 Regulation”).The 2016 Regulation basically implements a number of articles under Presidential Regulation No. 4 of 2016 on the Acceleration of Electrical Infrastructure Development, [1] which required further directives regarding procedures for the granting of government guarantees (jaminan pemerintah) in order to accelerate the development of electrical-power infrastructure (pembangunan infrastruktur ketenagalistrikan–“PIK”) as organized by the Indonesian State Electricity Company (“PLN”).Previously, similar matters were regulated under Ministry Regulation No. 173/PMK.011/2014 , however these only focused on the granting of business feasibility guarantees to PLN for the development of electrical power plants fueled by renewable energy, coal and natural gas through cooperation agreements with private electricity developers (“2014 Regulation”).The 2016 Regulation is of relevance to PLN, businesses working in the electrical sector, financial institutions and the government.Government GuaranteesThere are two types of fiscal guarantees which can be provided by the government in order to support the acceleration of PIK projects, namely: [2]