In August 2017, the Minister of Energy and Mineral
Resources introduced a new regulation which revoked its
previous controversial (and short-lived) regulation which had
required that the ministry's approval be obtained by sponsors
of independent power producers (IPP) before executing any share
transfer or change of the IPP's board of directors or
Under the new regulation, sponsors of geothermal IPPs are
still required to obtain approval from the ministry for any
public share transfer (that is, through a stock exchange)
occurring after the exploration phase. A notification is only
required to be provided to the ministry for private share
transfers occurring after the exploration phase.
Before the commercial operation date (COD) is reached,
sponsors of non-geothermal IPPs are required only to notify the
ministry of any qualified share transfers between affiliates.
Transfers of shares to non-affiliates before the COD is reached
are still prohibited (and no explicit exemptions are provided
to this blanket prohibition).
Under the new regulation, IPP sponsors (whether geothermal
or non-geothermal IPP sponsors) are no longer required to
obtain the ministry's approval before amending the structure of
their boards of directors or commissioners. Instead, they are
required simply to notify the ministry.
Even with the relaxation of the rules as described above,
the new regulation would still impede lenders in terms of the
enforcement of securities (especially share pledges) that
occurred before the COD. As previously mentioned, the new
regulation lacks any exemptions to the general prohibition on
share transfers to non-affiliates, which could lead to
difficulties during the enforcement process.
The ministry is continuing to consider whether the new
regulation should be further amended to alleviate, among other
things, the potential commercial difficulties for lenders as
and Emir Nurmansyah
Ali Budiardjo Nugroho Reksodiputro