Ministry of Environment Prepares Implementing Regulations for the PSEL Take-and-Pay Scheme

The Ministry of Environment/Environment Control Agency (“KLH/BPLH”) is currently preparing regulations governing the implementation of the take-and-pay scheme for Waste-to-Energy (Pengolahan Sampah Menjadi Energi Listrik - “PSEL”) projects. These regulations will serve as implementing provisions for Regulation of the President No. 109 of 2025 on Urban Waste Handling Through Waste Processing into Renewable Energy Based on Environmentally Friendly Technology (“Perpres 109/2025”). This adjustment forms part of an evaluation of the operational and funding sustainability of the projects.

Vinda Damayanti Amansyah, Deputy for Waste and Hazardous and Toxic Materials Management at KLH, stated that the proposed changes to the scheme are still under discussion, particularly with regard to the consequences for business entities that are unable to meet the applicable performance targets. “So, the issue with the current take-or-pay scheme is that if the Business Entity Provider (Badan Usaha Penyedia - “BUP”) is unable to meet the target, it would be required to pay a penalty, and the arrangement could even potentially be transferred. So, this is still a matter for discussion; we are still in the process,” Vinda said.

Under the existing provisions, the take-or-pay scheme under the Electricity Sale and Purchase Agreement (Perjanjian Jual Beli Listrik -“PJBL”) requires the BUP to meet the prescribed electricity production target. For PSEL projects, the target is 5 megawatts (“MW”). If the target is not achieved, the business entity may be subject to a penalty or fine payable to PT PLN.

KLH/BPLH is currently coordinating with PT PLN to discuss the implementation of the change from the take-or-pay scheme to the take-and-pay scheme. The adjustment also takes into consideration the mechanism to be applied if the BUP fails to achieve the prescribed target. In addition to the obligation to pay a penalty, there is a proposal to transfer the project or the rights to manage the project. Discussions concerning the adjustment to the scheme and the relevant regulations are still ongoing.