MINISTRY OF ENERGY AND MINERAL RESOURCES

OF THE REPUBLIC OF INDONESIA

MINISTERIAL DECREE OF ENERGY AND MINERAL RESOURCES

OF THE REPUBLIC OF INDONESIA
Number: 09 Year 2016
ON PROCEDURE OF SUPPLY AND DETERMINATION OF PRICE OF COAL
FOR MINE-MOUTH POWER PLANT

BY THE GRACE OF GOD ALMIGHTY

MINISTER OF ENERGY AND MINERAL RESOURCES

OF THE REPUBLIC OF INDONESIA,
Considering a. that the power supply shall be secured on a continual and sustainable basis, of
which the quality and reliability have to be good in order to support the growth of
development;

b. that in support to the power supply, it shall be necessary to optimize the use of
coal for mine-mouth power plant;

c. that in order to keep the balance between the interests of coal supply and the
continuation of the development of mine-mouth power plant it shall be necessary
to again regulate about the calculation of margin;

d. that based on the consideration as cited in letters a, b, and c it is necessary to enact

Indonesian Ministerial Decree of Energy and Mineral Resources on Procedure of
Supply and Determination of Price of Coal for Mine-Mouth Power Plant;

Referring to in 1. Law Number 30 Year 2007 on Energy (State Gazette of the Republic of Indonesia
Year 2007 Number 96, Supplement to State Gazette of the Republic of Indonesia
Number 4746);

2. Law Number 4 Year 2009 on Mineral and Coal Mining (State Gazette of the
Republic of Indonesia Year 2009 Number 14, Supplement to State Gazette of the
Republic of Indonesia Number 4959);

3. Law Number 30 Year 2009 on Electricity (State Gazette of the Republic of Indonesia
Year 2009 Number 133, Supplement to State Gazette of the Republic of Indonesia
Number 5052);

4. Indonesian Government regulation (PP) Number 23 Year 2010 on Implementation of

Mining Undertakings of Mineral and Coal (State Gazette of the Republic of
Indonesia Year 2010 Number 29, Supplement to State Gazette of the Republic of
Indonesia Number 5111) as having been amended for several times and the latest
amendment by Indonesian government regulation (PP) Number 77 Year 2014 on
Third Amendment of Indonesian government regulation (PP) Number 23 Year 2010
on Implementation of Mining Undertakings of Mineral and Coal (State Gazette of
the Republic of Indonesia Year 2014 Number 263, Supplement to State Gazette of
the Republic of Indonesia Number 5489);

5. Indonesian Government Regulation Number 14 Year 2012 on Undertakings of Power

Supply (State Gazette of the Republic of Indonesia Year 2012 Number 28);

6. Indonesian Presidential Decree Number 59/M Year 2015 dated May 6, 2015;

7. Indonesian Ministerial Decree of Energy and Mineral Resources Number 34 Year

2009 on Priority to Supply Mineral and Coal for Domestic Needs (State Gazette of
the Republic of Indonesia Year 2009 Number 546);
 8. Indonesian Ministerial Decree of Energy and Mineral Resources Number 17 Year
2010 on Procedure to Determine Reference Selling Prices of Mineral and Coal (State
Gazette of the Republic of Indonesia Year 2010 Number 463);

9. Indonesian Ministerial Decree of Energy and Mineral Resources Number 18 Year

2010 on Organization and Work Procedure of Ministry of Energy and Mineral
Resources (State Gazette of the Republic of Indonesia Year 2010 Number 552); as
having been amended and the latest amendment by Ministerial Decree of Energy
and Mineral Resources Number 30 Year 2014 on the Second Amendment of
Ministerial Decree of Energy and Mineral Resources Number 18 Year 2010 on
Organization and Work Procedure of Ministry of Energy and Mineral Resources
(State Gazette of the Republic of Indonesia Year 2014 Number 1725);

10. Indonesian Ministerial Decree of Energy and Mineral Resources Number 35 Year
2013 on Procedure of Permit of Power Undertakings (State Gazette of the Republic
of Indonesia Year 2013 Number 1524);

DECIDES

To Enact Indonesian Ministerial Decree of Energy And Mineral Resources on

Procedure of Supply and Determination of Price of Coal for Mine-
Mouth Power Plant
CHAPTER I
GENERAL PROVISION

Article 1

In this Indonesian Ministerial Decree what is meant by:

1. Coal shall be sediment of organic carbon that was naturally formed from the
remains of plants.

2. Coal price for mine-mouth power plant shall be the base price or reference price
as specifically determined for coal that is used as fuel for the mine-mouth power
plant.

3. Reference price of coal shall be the reference or base price as determined based
on the total production cost of coal plus margin.

4. Mine-mouth power plant shall be coal-fired power plant (PLTU) and combined-
cycle power plant fueled by coal whose supply is guaranteed by Mining Company
based on the Coal Purchases and Sales Agreement.

5. Mining Company shall be the company that conducts the coal mining
undertakings.

6. Company of Mine-mouth Power Plant shall be the holder of permit of power

supply that operates the mine-mouth power plant.

7. Permit of Mining Undertakings of Coal of Operation and Production, hereinafter

referring to IUP Operation Production of Coal, shall be a permit of undertakings
that is granted after having completed the implementation of the permit of
mining undertakings of coal exploration so that it can carry out the activity of
operation and production of coal.

8. Special Permit of Mining Undertakings of Coal for Operation and Production,

hereinafter referring to IUPK Operation Production of Coal, shall be a permit of
undertakings that is granted after having completed the implementation of the
special permit of mining undertakings of coal exploration so that it can carry out
the activity of operation and production of coal within an area of special permit
of mining undertakings of coal.
 9. Agreement on Cooperation of Coal Mining Undertakings, hereinafter referring to
PKP2B, shall be an agreement between the Government of the Republic of
Indonesia and a company of Indonesian legal entity for the activity of coal mining
undertakings.

10. Permit of Undertakings of Power Supply hereinafter referring to IUPTL shall be a

permit to conduct the undertakings to supply electricity or power for the public.

11. Minister shall be the Minister in charge of governmental affairs in the sector of
mineral and coal mining.

12. Director General shall be the Director General who is in charge of formulating
and implementing the policy and technical standardization in the mineral and
coal sector.

CHAPTER II
COAL SUPPLY FOR DEVELOPMENT OF MINE-MOUTH POWER PLANT

Article 2

Principally the development of mine-mouth power plant shall be based on as follows:

a. the use of coal that is economically feasible for mine-mouth power plant;

b. the supply of coal is guaranteed by the coal mining company for as long as the
operational period;

c. the location of the power plant is no more distant than 20 (twenty) kilometers
from the area of IUP, IUPK, or PKP2B; and

d. no inclusion of delivery cost of coal except the cost of delivery from mine site
to the facility of stockpile of the mine-mouth power plant.

Article 3

(1) Coal supply for the development of mine-mouth power plant shall be based on the
agreement on coal purchases and sales between the coal mining company and the
company of the mine-mouth power plant.

(2) The coal for the mine-mouth power plant that will be developed can be supplied by
more than 1 (one) coal mining company.

(3) The company of mine-mouth power plant as cited in paragraph (1) can be:

a. the holder of IUPTL Integration; and

b. the holder of IUPTL Power Plant.

(4) Coal mining company shall be obliged to guarantee the supply of coal to the
company of mine-mouth power plant based on the agreement of coal purchases
and sales or based on the period of time of power purchase agreement.

Article 4

(1) Coal mining company as cited in Article 3 shall be the holder of:

a. IUP Operation Production of Coal;

b. IUPK Operation Production of Coal; and

c. PKP2B.

(2) Coal mining company as cited in paragraph (1) shall meet the requirements as
follows:
 a. to obtain a clear and clean certificate for the holder of IUP Operation Production
of Coal;

b. to own the allocation of stock of coal that is appropriate for mine-mouth power
plant;

c. to obtain an approval of reference price of coal from Director General.

Article 5

The company of the mine-mouth power plant as the holder of IUPTL Integration as
cited in Article 3 paragraph (3) letter a shall be a State-owned Enterprise (SOE) with an
integrated business line of power supply for the sake of the public.

Article 6

(1) The company of the mine-mouth power plant as the holder of IUPTL Power Plant as
cited in Article 3 paragraph (3) letter b shall be a consortium that is created by coal
mining company in affiliation with another entity of undertakings.

(2) The consortium as cited in paragraph (1) shall create an Indonesian-legal based
entity as a company of mine-mouth power plant.

(3) At least 10 percent of the shares of the company of mine-mouth power plant as
cited in paragraph (2) shall be obligatorily owned by Mining Company through
affiliation.

CHAPTER III
PROCEDURE TO DETERMINE COAL PRICE

Part One
General

Article 7

(1) Coal price for mine-mouth power plant shall be based on reference price by taking
into account the escalation.

(2) Coal price for mine-mouth power plant as cited in paragraph (1) shall be the price
calculated based on the selling price in the spot at the facility of stockpile of the
mine-mouth power plant.

Article 8

The reference price as cited in Article 7 paragraph (1) shall be calculated based on the
formula of production cost plus margin.

Part Two
Production Cost

Article 9

(1) Production cost as cited in Article 8 shall be calculated based on the production
cost as determined by Director General on behalf of Minister.

(2) Director General on behalf of Minister shall determine the production cost as cited
in paragraph (1) by taking into account the progress of technical condition of mining
and the other factors such as:

a. Stripping cost of overburden;

b. Coal extraction;
 c. Coal delivery from the location of mine to the location of processing facility;

d. Coal delivery from the processing facility to the stockpile of PLTU;

e. Processing of coal;

f. Monitoring and management of environment;

g. reclamation and post-mine activity;

h. Work safety and health;

i. Community development and empowerment;

j. Land release/ compensation;

k. Overhead;

l. depreciation and amortization; and

m. Dead rent and/or production contribution/ royalty.

(3) Production cost as cited in paragraph (2) shall have included the tax and other costs
in the process of coal production.

Part Three
Margin

Article 10

(1)The margin as cited in Article 8 as the benefit for the Mining Company shall be
minimal at 15 (fifteen) percent and maximal at 25 (twenty five) percent of the total
production cost as cited in Article 9.

(2) The margin as cited in paragraph (1) shall be determined based on the agreement
between the Mining Company and the Company of mine-mouth power plant.

(3) In case that a common ground of agreement on the price cannot be reached
between the Mining Company and the Company of mine-mouth power plant, in a
period of 60 (sixty) days as of the enactment of this Ministerial Decree or as of the
date of agreement, Director General shall determine the margin by considering the
principles of usefulness, transparency, fairness, and national and/or regional
interest.

Part Four
Determination of Reference Price of Coal

Article 11

(1) Mining Company shall be obliged to request for an approval of the reference price
of coal as cited in Article 8 to Minister c.q. Director General.

(2) In requesting for approval of reference price of coal as cited in paragraph (1)
attachments as follows shall be included:

a. Copy of IUP Operation Production of Coal or IUPK Operation Production of Coal;

b. Copy of certificate of clear and clean status for the holder of IUP Operation
Production of Coal;

c. Plan of production and mining; and

d. Feasibility study and/ or environmental document that has been approved.

(3) Director General on behalf of Minister shall evaluate the request for approval of
Reference Price of Coal as cited in paragraphs (1) and (2).

(4) Based on the evaluation as cited in paragraph (3), Director General shall approve
the Reference Price of Coal within a period of 14 (fourteen) work days as of the day
of receiving the complete and appropriate request.

(5) Mining Company shall be allowed to conduct the purchases and sales of coal with
the Company of mine-mouth power plant after having received an approval about
the reference price of coal from Director General on behalf of Minister.

Article 12

The reference price of coal as cited in Article 11 shall be permanently effective during
the period of agreement on the purchases and sales of coal or during the period of
power purchase agreement.

Part Five
Escalation

Article 13

(1) Escalation as cited in Article 7 paragraph (1) shall be effective after:

a. the commercial operation date of mine-mouth power plant that belongs to

IUPTL Integration;

b. the commercial operation date of mine-mouth power plant that belongs to

IUPTL Power Plant;

(2) Escalation as cited in paragraph (1) shall be determined based on the changes for 1
(one) year as follows:

a. the exchange rate of Rupiah;

b. the price of diesel fuel;

c. the Consumer Price Index; and

d. Regional Minimal Wage.

(3) Escalation as cited in paragraph (1) shall be adjusted in every 1 (one) year as of the
commercial operation date.

(4) Escalation as cited in paragraphs (2) and (3) shall be determined based on as
follows:

a. agreement between Mining Company and Company of mine-mouth power plant

in case that the mine-mouth power plant is developed by the holder of IUPTL
Integration; or

b. agreement as cited in the power purchase agreement in case that the mine-
mouth power plant is developed by the holder of IUPTL Power Plant;

CHAPTER IV
OTHER PROVISIONS

Article 14

(1) Mining Company shall be allowed to make agreement on purchases and sales of
coal with other companies of mine-mouth power plants as long as the allocation of
reserve and the quality of coal can meet the need of mine-mouth power plant.

(2) The agreement on purchases and sales of coal as cited in paragraph (1) shall be
 obliged to meet the stipulations of Articles 7 through 13.

CHAPTER V
TRANSITIONAL PROVISION

Article 15

At the time of the effectiveness of this Ministerial Decree, the coal price for mine-
mouth power plant whose selling price of power supply has been approved by
Minister, or from the result of auction and/ or direct assignment as cited in the Power
Purchase Agreement prior to the enactment of this Ministerial Decree, shall remain
effective until the date of expiration.

CHAPTER VI
CLOSING PROVISION

Article 16

At the time of the effectiveness of this Ministerial Decree, Ministerial Decree Number
10 Year 2014 on Procedure of Supply and Determination of Price of Coal for Mine-
mouth Power Plant shall be revoked and declared no longer effective.

Article 17

This Ministerial Decree shall be effective as of the date of enactment.

That everybody shall be made aware of, and this Ministerial Decree shall be published
in the State Gazette of the Republic of Indonesia.

Enacted in Jakarta
Dated April 4, 2016
MINISTER OF ENERGY AND MINERAL RESOURCES
OF THE REPUBLIC OF INDONESIA.

Signed

SUDIRMAN SAID

Legislated in Jakarta
Dated April 4, 2016
DIRECTOR GENERAL OF LAWS AND REGULATIONS
MINISTRY OF JUSTICE AND HUMAN RIGHTS
OF THE REPUBLIC OF INDONESIA,

Signed

WIDODO EKATJAHJANA

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 512

Copy as of the original version

MINISTRY OF ENERGY AND MINERAL RESOURCES
Head of Bureau of Laws

Signed

Hulfron Asrofi