JAKARTA (TheInsiderStories) – The Energy and Mineral Resources (EMR) Ministry has revoked as many as 90 regulations as well as 96 certifications, recommendations and permits which are considered overlapping, irrelevant or contra-productive with the government’s efforts to boost investment in the energy sector.
“In total, as many as 186 (regulations and permits) have been scrapped,” Minister for EMR Ignasius Jonan said at a press conference on Monday (05/03).
Early on Feb. 5, the ministry revoked 32 regulations in oil and gas, mineral, coal, electricity and renewable energy. Since then, more regulations, permits, and recommendations were further revoked.
The regulations and permits are spreading in sub-sectors oil and gas, coal and mineral, electricity and renewable energy. The move is in line with President Joko Widodo’s drive to improve Indonesia’s business climate and competitiveness.
Out of the total 90 regulations, 18 regulations were scrapped in oil and gas sectors, 20 regulations in electricity, 32 in coal and mineral sector, 5 in new and renewable sector, 12 technical regulations issued by the Special Task Force for Upstream Oil and Gas Business and 3 regulations issued by the downstream oil and gas regulator “BPH Migas”.
Meanwhile, out of the 96 certifications, recommendations and permits, 23 were in oil and gas, 64 in coal and mineral and 9 in renewable energy.
Among permits that have been scrapped is the Recommendation on Foreign Workers and Plan to Employ Foreign Workers, Recommendation Letter to Distribute Fuel (RLDF) and Registered Recommendation Letter (RRL) which was required for an oil and gas support companies as well as an approval for a design and the utilization of oil and gas equipment.
“In running a supporting oil and gas business, the requirement to obtain RRL has hampered investment in oil and gas sector. It takes days to obtain the permit and lengthening the bureaucratic chain. Therefore, we decided to revoke it,” said Ego Syahrial, acting Director General for Oil and Gas.
He added in the downstream sector, the ministry decided to scrap the RLDF or set up a fuel station, which could take up to six months to obtain it. The recommendation letter is scrapped as it hampers the intention of the government to create an effective distribution network in this archipelagic nation.
In the electricity sector, 20 regulations have been revoked, including rules related with the dwelling time for inspection from border to post border as well as simplify product classifications, therefore it is easier for the government agencies to carry out supervision.
In coal and mineral sector, among the 64 rulings that were scrapped is the registration for mining transportation companies, principal permit for processing, recommendations to employ foreign workers and others.
In the renewable sector, among permits that were scrapped is the permit to use the warehouse for geothermal explosive materials, the recommendation to abolish geothermal explosive materials, recommendation to use equipment for installations in the geothermal sector and Registered Recommendation Letter for geothermal supporting business.
Based on the ministry’s data, investment in the oil and gas sector has declined from US$20.72 billion in 2014 to $17.38 billion in 2015, further fell to $12.74 billion in 2016 and further dropped to only $9.33 billion in 2017. This means last year’s investment in the oil and gas sector was only half of the total investment in the sector in 2014.
The decline was mainly driven by the drop in oil price. The complicated business permits and business process in the sector have further discouraged investors and business players to increase their investment in the country.
The EMR Ministry has set a target of investment in oil and gas sector at $17.04 billion in 2018, consisting of $14.44 billion in upstream oil and gas and $2.59 billion in downstream oil and gas sector.
The target would be achieved if the government improves the business climate in the sector, including by scrapping regulations that are no longer relevant and limits room for business players and investors in expanding their business or invest in new projects.