The Department of Energy and Mineral Resources has recently released a Draft Bill on Energy (the “Bill”) for public discussion. The Bill is among the prioritized bills on the national legislation program (Prolegnas). So far, it consisted of 32 articles divided into 32 chapters.

Main purpose of the Bill is to promote fair utilization of existing energy resources, energy conservation and to develop renewable energy resources. The Bill is also expected to become the umbrella regulation for other energy related laws.

The Bill had been formed based on Article 33(2) and (3) of the constitution which stipulates that natural resources pivotal to the lives of the people shall be controlled by the state and is utilized for the greater interests of the people. Under the Bill, energy is defined simply as any ability to use heat, light mechanical, chemical, and electromagnetic energy for work irrespective of whether it is generated from a direct source or is converted from some other source.

Most of the bill’s provisions were either verbatim repetition of the constitution or advisory provisions which do not create legal obligation to be complied.  The Bill, for example, stipulated that the central or regional government will guarantee energy provision for internal use, but failed to elaborate the legal consequences if this provision is breached.

Similarly, in its second section the Bill stipulates provisions concerning energy conservation. However, it is silent as to who, what and how this must be carried out and it is silent with regards to the legal consequences of its breach. A rather detailed provision concerning this matter however, is being elaborated by Article 15, in which it obligates energy usage worth more than 6.000 kVA to perform energy conservation and appoint energy manager to audit its energy use. The government will later detail this provision in a Government Regulation.

Article 28 of the Bill regulates taxation, the energy tax. It is stipulated in the Bill that collection of the energy tax will be done in accordance with prevailing regulation in each sector. The provision warrants that the government should prevent double taxation.

Several NGOs had urged that the Bill shall be based on an academic draft. They also suggest that a specific time schedule and targets should be stipulated. With regards to the promotion of renewable energy, it is suggestible that the government render tax facilities for the producers.