THE MINISTER OF FINANCE OF THE REPUBLIC OF INDONESIA REGULATION NUMBER: 77/PMK.01/2011

For those who are engaged in power plant development, I would further like to share the following main points from the above subject:

-          Business feasibility guarantee is a confirmation that central government c.q. the Minister of Finance guarantees the feasibility of business of State Electricity Enterprise based on authorities of the Minister Finance.

-          Electricity generation and/or transmission development by using Renewable Energy, Coal, and Gas is the electricity generation and/or transmission development projects as stated by the Minister of Energy And Mineral Resources based on President Regulation Number 4 of Year 2010 regarding the Assignment to State Electricity Enterprise to speed up electricity generation development which uses Renewable Energy, Coal and Gas.

-          Power Purchase Agreement (PPA) is electricity purchase agreement between State Electricity Enterprise and Private Electricity Developers.

-          Shortfall is State Electricity Enterprise fund condition which is not adequate to fulfill payment obligations in accordance with PPA caused by central government’s actions/decisions which significantly affect negatively electricity generation and/or transmission development projects.

-          Feasibility Guarantee is given by central government c.q. the Minister of Finance to State Electricity Enterprise for electricity generation and/or transmission development cooperation with Private Electricity Developers as referred to by President Regulation Number 4 of Year 2010 regarding the Assignment to State Electricity Enterprise to Speed up Electricity Generation Development which uses Renewable Energy, Coal, and Gas.

-          The Minister of Finance on behalf of central government shall give Feasibility Guarantee to State Electricity Enterprise for electricity generation and/ or transmission development.

-          State Electricity Enterprise may advise the existence of Feasibility Guarantee to Private Electricity Developers.

-          Feasibility Guarantee is given to State Electricity Enterprise in the form of letter of guarantee stating that central government guarantees State Electricity Enterprise for default in fulfilling payment obligations under PPA in case of shortfall.

-          Feasibility Guarantee given to State Electricity Enterprise shall be in the forms of Public Service Obligations (PSO) finansial compensation through electricity subsidy or liquidity facility to guarantee business feasibility of State Electricity Enterprise caused by central government’s actions/decisions leading to default of State Electricity Enterprise or loss compensation obligations to Private Electricity Developers.

-          Fiscal liquidity facilities for loss compensation obligations to Private Electricity Developers maximum shall be for total investment already incurred plus interest if investment is financed by loans.

-          Funding commitment of Private Electricity Developers constitutes financial institutions loan agreement draft which terms and conditions should have prior approval of the Minister of Finance.