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Jakarta Post

BKPM to handle electricity, mining permits

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Sat, December 13, 2014   /  09:20 am

Beginning next year, the Investment Coordinating Board (BKPM) will handle the issuance of licenses for companies looking to operate in the electricity and mineral sectors as part of the government'€™s program to transform the board into a one-stop licensing service.

BKPM'€™s chairman Franky Sibarani said on Friday that the licensing process in the electricity sector, which includes the issuance of permits for power plants, would be transferred from the Energy and Mineral Resources Ministry to his agency early next year.

'€œElectricity is currently a concern for the government, which is planning to produce 35,000 megawatts of additional capacity [within five years]. Moreover, many things have been delayed due to electricity issues,'€ Franky said.

The licensing process for the electricity sector would be formally transferred to the BKPM in January, along with the nationwide implementation of the integrated one-stop service for around another 500 sectors outside the energy ministry, Franky said.

Franky said that he hoped in June the BKPM would be able to handle the issuance of licenses in the minerals and coal sector, which include permits needed for mining exploration and production operations and the establishment of smelting facilities.

Meanwhile, Agung Wicaksono, a member of the reform team for the oil and gas sector, said the ministry would assign a team headed by an expert to the BKPM to work on the administrative process for the issuance of permits in the electricity sector.

'€œWe have told the BKPM that this won'€™t be easy because in this sector there are eight ministries and institutions, as well as local administrations involved,'€ he said.

State-owned electricity firm PLN president director Nur Pamudji said that with the one-stop service policy, the BKPM would be able to streamline the licensing process in order to reduce the time taken and eliminate red tape.

'€œUnder the plan, investors wanting to build a power plant will only need to go to the BKPM to obtain a permit. I don'€™t know the number of permits that private investors currently need, but PLN needs to get 52 permits,'€ he said.

The prolonged process required to obtain permits to do business has long been an issue in Indonesia.

The World Bank'€™s '€œDoing Business 2015'€ report ranks Indonesia 114th out of 189 nations assessed. Thus, easing licensing processes is seen as necessary to boost economic growth in the country, where investment accounts for around 30 percent of GDP.

The head of the energy ministry'€™s performance control unit, Widhyawan Prawiraatmadja, said the issuance of licenses for oil and gas exploration and production and their downstream operations would in the medium term still be handled by the ministry.

However, in the long run, the ministry would transfer all licensing in the oil and gas sector including for oil and gas exploration, production and downstream operations to the BKPM, Widhyawan said.

Currently 286 permits need to be obtained to run an oil and gas business in Indonesia. At least 26 of these must be processed by the oil and gas directorate general and 260 by the Upstream Oil and Gas Regulatory Task Force (SKKMigas), according to acting oil and gas director general Naryanto Wagimin.

'€œFor now, we will prioritize how to reduce the number of permits and later we will work to make it into a one-stop integrated service as well,'€ Naryanto said.

The high number of licenses that must be obtained has been blamed for the reduction in attractiveness of the oil and gas sector in the country, which is desperately trying to boost output to narrow the gap between petroleum supply and demand.

A number of electricity projects are currently behind schedule, including the 2,000-megawatt power plant development in Batang regency in Central Java, which is on hold because of land-acquisition problems.

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