Legal Analysis of Foreign Direct Investment Joint Venture Schemes in Renewable Energy Development in Indonesia: Case Study of the PT PLN Indonesia Power and GCL Intelligent Energy Consortium (Jurnal Hukum Indonesia)

Summary

• The 100 MW Banyuwangi photovoltaic project is held through PT Hijaunesia GCL Banyuwangi, with 51% PLN IP and 49% GCL.p.1
• The 100 MWac Gajahmungkur floating solar project is held through PT Hijaunesia GCL Gajahmungkur, with 51% PLN IP, 44% GCL and 5% Perum Jasa Tirta I.p.1
• Under the earlier negative investment list, generation above 1 MW up to 10 MW limited foreign ownership to 49%, while above 10 MW allowed up to 95%.p.9
• Generation capacity above 10 MW has since been opened to 100% foreign ownership without a domestic partnership obligation.p.9
• GCL holds reserved matters requiring qualified approval of 75% or even 100% of votes for strategic corporate actions.p.10
• Solar panels generally have an operational life of 20 to 25 years.p.5

Key insights

1. The 51% majority stake of SOEs reflects the constitutional doctrine of state control under Article 33 paragraph (3) of the 1945 Constitution.p.1
2. The decision to keep 51% for PT PLN Indonesia Power is a voluntary corporate policy, not compliance with a legally mandated foreign ownership limit.p.9
3. A 51% stake alone does not allow PLN Indonesia Power to unilaterally amend the articles of association or dissolve the SPC.p.10
4. Indonesia ratified the ICSID Convention through Law No. 5 of 1968.p.13
5. Perpres 112/2022 does not specify the mechanism and formula for renewable power purchase prices, so investor certainty relies largely on PPA contracts.p.12
6. Including Perum Jasa Tirta I in the ownership structure turns water-space permitting risks into a shared corporate commitment.p.11