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New Outlook on Nickel Investment: Electric Vehicle Charging Infrastructure

EV Charging Station

Large mining companies in Indonesia are flocking to widen their business portfolios in the nickel industry in Indonesia. The shift in investment concentration was initially triggered by the prospect of the national nickel downstream industry being seen as moving positively in line with the government’s commitment to join the global supply chain of components and batteries for electric vehicles. One of them is the investment in Electric Vehicle Charging Infrastructure which is currently starting to develop in Indonesia.

According to the International Energy Agency (IEA) report, Electric Vehicles (“EV”), specifically electric cars, have a significant increase led by China in the first place and followed by Europe and the United States. Many countries have been promoting and developing the EV industry for environmental and economic benefits as it reduces emissions, creates new industrial development, and creates new jobs. However, several studies have found that the increase in EV sales since 2009 is mainly due to policy support from the government during the early stages of EV market penetration. Countries that develop the EV industry provide various incentives on both the demand and supply sides.

In China, Manufacturers are given incentives to push the EV production and at the same time to penetrate and establish the market—purchase incentives for customers are also given. Policy incentives in China are divided into four categories. First, purchasing incentives which include government subsidies, purchase tax exemptions, vehicle use tax exemptions, and insurance discounts. Second, the ease of the EV registration procedure by giving exemptions from vehicle registration fees, providing a dedicated registration channel, and providing dedicated license plates. Third, privileges for EV users which include no driving restriction, parking benefits, road/bridge toll exemption, and vehicle inspection fee exemption. Last, the policy regarding subsidies for charging infrastructure construction and charging discounts for EV users.

As the second largest EV market, EU countries implement different policies e.g., in Norway, the government provides an exemption from purchase tax, VAT, and an 80% reduction in registration tax. This regulation results in a 50% reduction in the cost of

purchasing EVs. Furthermore, the government provides sufficient EV infrastructure of approximately 1800 standard chargers and 70 fast chargers built since 2011. In addition, some countries, such as Belgium, Denmark, Spain and Portugal provide direct subsidies to increase the market penetration of EVs. In Denmark, policies on taxes due to fuel consumption are enforced. On the other hand, the government grants a 20% exemption from the purchase tax. In Iceland, the government provides EV owners with exemptions from purchase, Value Added Tax (VAT), and annual ownership tax while increasing the charging infrastructure levels.

In 2022, the Government of the Republic of Indonesia through the Minister of Energy and Mineral Resources (“MEMR”) is targeting as many as 1,000 (one thousand) units of fuel-based motorcycles to be converted into electric-powered motorcycles. This is in view of Indonesia’s commitment to controlling climate change, with a target of reducing carbon emissions or known as the Nationally Determined Contribution (“NDC”) by 29% (twenty nine percent) in 2030. As an effort to support this commitment, the State Electricity Company (Perusahaan Listrik Negara, “PLN”) (Persero) is preparing to provide electric vehicle charging infrastructure, one of which is the Public Electric Vehicle Charging (Stasiun Pengisian Kendaraan Listrik Umum, “SPKLU”). PLN is committed to accelerating the use of electric vehicles by providing electricity infrastructure through SPKLU, Public Electric Battery Vehicle Replacement (Stasiun Penukaran Baterai Kendaraan Listrik Umum, “SPBKLU”) and Home Charging Stations. To smooth this plan, the MEMR seeks to facilitate the licensing process related to Electric Vehicle Charging Infrastructure.

A. Regulation of Electric Vehicle Charging Infrastructure

Electric Vehicle Charging Infrastructure is stipulated under Presidential Regulation Number 55 of 2019 on the Acceleration of the Battery-Based Electric Motorized Vehicle Program for Road Transportation (“PR 55/2019”). PR 55/2019 is also one of the government’s ways to deliver and achieve the Paris Agreement targets. The International Energy Agency estimates that EVs could be vital for more sustainable transportation due to their low emissions and lower reliance on fossil-based fuels. EVs offer many advantages compared to internal combustion vehicles, such as high energy efficiency, minor environmental impact, and high driving performance.

Some key points contained under PR 55/2019 are provided as follows:

  1. Facilities Provided
    1. Charging facilities; and/or
    2. Battery swap facilities
  2. Charging Station
    Charging Station is 100% (one hundred percent) open for foreign investment ownership
  3. Environmental Protection
    Battery waste must be handled by recycling and/or through management carried out by domestic companies of Battery Electric Vehicles (“BEV”) with specific licenses.
  4. Building Contractor
    1. State-Owned Enterprises (“Badan Usaha Milik Negara, “BUMN”) and/or
    2. Other business entitiesHowever, for the initial stage, PLN will be assigned as the contractor, in which PLN may cooperate with BUMN or other business entities. Furthermore, the sale of electricity shall be conducted by the holder of business license for the supply of electricity that:
      1. owns business locations; and/or
      2. owns business locations, and cooperates with BUMN or other business entities.
    3. Location for Installation
      • Public Fuel Pump Stations (“SPBU”)
      • Gas Pump Stations (“SPBG”)
      • Central and Regional Government Offices
      • Shopping centers
      • Public parking by the roads
      • Residences particularly for private electricity

To increase investment in charging infrastructure, a collaboration between the government and related industries is necessary. In addition, infrastructural support, such as a network of public charging stations and after-sales service centers, must be established. It is still early days for EV adoption in Indonesia, but the potential for a positive impact on the economy and environment is significant. Collaboration between government stakeholders, state-owned enterprises, and the private sectors will be needed to build local EV ecosystems—ones with the potential to transform the environment and the economy.

Regulation of the MEMR Number 13 of 2020 on Provision of Electric Charging Infrastructure for Battery-Based Electric Motorized Vehicles (Kendaraan Bermotor Listrik

Berbasis Baterai, “KBLBB”) (“MR 13/2020”) regulates business schemes and business permits for SPKLU and SPBKLU Business Entities, as follows:

EC-INFRA

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  1. SPKLU Business EntityInfrastructure Development by SPKLU Business Entities can be carried out based on the provider scheme, retailer scheme, and cooperation scheme. Business actors need an SPKLU or SPBKLU identity number and permit to carry out the schemes.
    1. In the provider scheme, the provider generates its own electricity and then sells it to KBLBB consumers where the provider is required to have a business area determination, an Integrated Electricity Supply Business Permit (Izin Usaha Penyediaan Tenaga Listrik, “IUPTL Terintegrasi/Intergrated IUPTL”) and an SPKLU identity number.
    2. In the retailer scheme, the electricity seller buys electricity from PT PLN (Persero) or other business area holders and then sells it on behalf of its own business entity. This scheme requires a business area determination, an Electricity Supply Business for sales Permit (Izin Usaha Penyediaan Tenaga Listrik, “IUPTL Penjualan/ IUPTL for sales”), and an SPKLU identity number.
    3. In the cooperation scheme, a business entity as a partner of PLN or other business area holders is only required to have an SPKLU identity number. Meanwhile, other permit requirements are sufficient with permits owned by PLN or other business area holders.
  2. SPBKLU Business Entity
    Business entities intending to run SPBKLU are only required to have an SPBKLU identity number
    More details of business schemes are described in table as follows:

Type of elec

Furthermore, licensing for the development of SPKLU and SPBKLU is facilitated under Regulation of the MEMR Number 5 of 2021 on Standards for Business Activities and Products in the Implementation of Risk-Based Business Licensing for the Energy and Mineral Resources Sector (“MR 5/2021”), which requires a recommendation from the regional government for the determination of SPKLU business areas. Now, that recommendation can be replaced with a document of proof of SPKLU land ownership or a cooperation agreement with SPKLU land owners.

B. Incentives

In support of PR 55/2019, the government of Indonesia has passed several regulations to provide tax and non-tax incentives to encourage more people to buy and use EVs. The tax incentives include the reduction of import duties on components, while non-tax incentives include the promotion of exports and the promotion of research and development. EVs are exempted from the PPNBM or sales tax on luxury goods

effective since 16 October 2021, and are given additional electricity discounts for electric vehicle owners and also a 30% (thirty percent) discount on electricity consumption at night. The vehicle ownership tax is also determined by whether the vehicle meets the national emission standards, under which an EV is considered to have zero emissions. A non-tax-incentives could be in the form of exempting electric vehicles from certain driving restrictions, such as the odd-even license plate policy currently implemented in Jakarta.

In addition, the Government also allows electric vehicles to be partially dismantled (IKD – Incompletely Knocked Down) or partially (CKD – Completely Knocked Down) – as long as the domestic industry is unable to produce the required components. Moreover, until local companies are able to ramp up their own production, complete electric vehicles (CBU – Completely Built-Up) may be temporarily imported.

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Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.