Ministry of ESDM Strengthens Penalties for Illegal Groundwater Use

The Ministry of Energy and Mineral Resources (Energi dan Sumber Daya Mineral– “ ESDM ”) is currently preparing a Draft Regulation of the Minister of ESDM on Guidelines for the Use of Resources in Groundwater. To complement existing regulations, the draft introduces financial consequences or fines for existing groundwater wells that fail to obtain permits by the end of the arrangement period on 31 March 2026.

“This draft complements Regulation of the Minister of Energy and Mineral Resources No. 14 of 2024 on the Implementation of Groundwater Business Permits and Approval for Groundwater Use (“ Permen ESDM 14/2024 ”), as well as the Guidelines for the Calculation, Collection, and Payment of Administrative Fines for Groundwater Permit Arrangements for groundwater users who do not yet have permits or whose SIPA has expired to obtain permit arrangement,” said Agus Cahyono Adi, Head of the Groundwater Center at the Geological Agency of the Ministry of ESDM, to Hukumonline.

Regarding the calculations of fines, for non-business groups and micro-scale businesses, the fine is set at zero rupiah, while small-scale businesses are subject to a tariff based on extraction discharge volume: below 10 m³ per day remains at Rp0, while above that threshold a fine of Rp250,000 to Rp500,000 applies. For medium- and large-scale businesses, groundwater extraction discharge below 10 m³ is subject to a flat rate, while above that threshold is calculated using a formula with specified minimum and maximum limits.

Agus emphasized that the fine imposed will not overburden affected parties because the draft regulation includes a cap on the maximum fine. The government is also providing relief for groundwater users who are unlicensed but regularly pay taxes. Proof of tax payment may serve as a reduction factor in the calculation of fine.