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Across the world, governments and environmentalists continue to exhibit growing concerns upon the drastic effects of global warming - where one of the main contributors towards the heightening impacts of global warming is due to the heavy reliance on fossil fuel-based vehicles. In order to combat these concerns and for the betterment of the environment. Numerous vehicle manufacturers such as Tesla and Hyundai have started to mass produce electric based vehicles (“EV”) with fiscal assistance and subsidization from their respective governments.
Mass manufacturing and global sales has already started for numerous years, where the year 2017 was a landmark year for electric vehicles as global sales of battery electric vehicles and plug-in hybrid vehicles surpassed one million units for the first time. Governments around the globe have realised the positive impacts if there was a change of reliance on gasoline and diesel to a more environment friendly substitute. According to a report conducted by Deloitte, reducing emissions, financial incentives as well as city access restriction are some major policies in helping to create an environment that continues to encourage the growth of EV adoption, where approximately 20 major cities worldwide have announced plans to ban gasoline and diesel cars by 2030 or sooner[1].
Indonesia has lately demonstrated slight indications towards the expansion and presence of EVs. Dody Budi Waluyo, Indonesian Central Bank Deputy Governor mentioned that starting from 1 October 2020, the down-payment for battery-powered electric vehicles (“BPEV”) installment will be reduced from 5% to 0%. Whilst there is some support from the Indonesian government, one of the major concerns of BPEV owners relates to the lack of public charging stations for BPEV.
In relation to owners’ concerns regarding BPEV’s charging stations, the Ministry of Energy and Mineral Resources (Kementerian Energi dan Sumber Daya Manusia or “ESDM”) opens opportunities for private enterprises to provide infrastructure for BPEV under ESDM Regulation No. 13 of 2020 concerning the Provision of Electricity Charging Infrastructure for Battery-Powered Electric Vehicles (“ESDM 13/2020”).
ESDM 13/2020, is an implementing regulation to Presidential Decree No. 55 of 2019 concerning the Acceleration of the Battery-Powered Electric Vehicle Program (“PR 55/2019”). Such regulations were enacted as an attempt of the Indonesian Government to increase energy efficiency and energy conservation in the field of transportation, to improve the quality of air and reduce greenhouse emission in the country. Further, the aim of this regulation is to accelerate the EV program for road transportation by granting fiscal and non-fiscal incentives to industry players.
The Indonesian government believes that Indonesia has reserves of raw materials in order to make batteries for BPEV, and wants to fill the domestic market on its own. In addition, Indonesia is aiming for cleaner air and to find new markets for its minerals by developing local demand for BPEV and hybrids by the middle of the next decade.
Key Provisions
Types of Charging Infrastructure
Generally speaking, charging infrastructures for BPEV encompasses recharging facilities and battery-replacement facilities. Recharging must comprise the followings under ESDM 13/2020:
BPEV recharging is conducted through private electrical installations and/or public BPEV charging stations (Stasiun Pengisian Kendaraan Listrik Umum or “SPKLU”).
Meanwhile, the battery exchange facility is carried out at the public BPEV battery exchange station (Stasiun Penukaran Baterai Kendaraan Listrik Umum or “SPBKLU”) which comprises of facilities at which batteries for BPEVs can be swapped. ESDM targets by 2035 that the number of SPKLU and SPBKLU will reach 22,500 units.
Assignments to PT PLN (Persero) (“PLN”)
ESDM 13/2020 stipulates that provisions of electricity charging infrastructure for BPEV is carried out through an assignment to PLN to cooperate with stated-owned enterprises and/or other privately owned business entities. When so assigned, PLN must draw up a road map for the provision of SPKLU and SPBKLU infrastructure that should specifically address the following matters:
As of this year, PLN plans to build 10 SPKLUs throughout Indonesia. Gradually until 2021, it is hoped that the number will continue to increase, in order to support the presence of BPEV ranging from battery-based electric cars, scooters (electric motorbikes), and various other BPEV. Through this collaboration, PLN and its partners will provide SPKLU in a number of agencies, including parking areas for motor vehicles in various offices and later in shopping centres.
Electricity Charging Tariffs
In regards to applicable tariffs for the charging infrastructure – this requires reference to ESDM Regulation No. 28 of 2016 on Electricity Tariffs Provided by PT Perusahaan Listrik Negara (Persero), which was most recently amended through the issuance of ESDM Regulation No. 3 of 2020.
As stated in ESDM 13/2020, the electricity tariff for bulk sales purposes uses the Q multiplier with the lowest magnitude of 0.8 and the highest of 2, with Q determined by the integrated Electricity Supply Business License (“IUPTL”) holder. IUPTL holders are licensed to conduct business in the provision of electricity for the public interest. Note - there are also Electricity Support Services Business License (“IUJPTL”) holders where this is a permit for the conducting of electricity support services businesses.
Further, the electricity tariff for special services uses the multiplier N factor with a maximum magnitude of 1.5. The application of the N multiplier factor is determined by the integrated IUPTL holder or the sales IUPTL holder as an SPKLU business entity.
This regulation provides relief for owners of private electrical installations, sales of IUPTL holders and SPBKLU business entities that apply for new connections or changes in electric power to integrate IUPTL holders. One relief is in the form of a connection fee and/or electricity subscription guarantee. In addition, integrated IUPTL holders are exempt from the obligation to pay the minimum amount for the first two years to: (a) owners of private electricity installations used for charging public transport electricity, (b) SPKLU business entities; and (c) SPBKLU business entities.
Conclusion
We believe this is just the start for BPEVs to strive in Indonesia. Transparent collaboration between the Indonesian government and the private sectors is key. In order to thrive in this market, private sectors need to be realistic about their capabilities and gaps, and focus on building strategic partnerships and alliances as part of an integrated, innovative and agile approach to the rapidly changing global automotive market. By opening SPKLU businesses to private entities - this will accelerate the mass use of environmental friendly BPEVs in Indonesia, increasing energy efficiency and energy conservation in the field of transportation. Moving one step closer in improving the quality of air and reduce greenhouse emissions in Indonesia.
If there are any queries with regards to how this may affect your business, please contact us for further legal consultation.
This information does not, and is not intended to, constitute as legal advice; instead, all information, content, and materials are for general information only.
