Navigating Indonesia’s Waste-to-Energy Framework: Key Insights from Presidential Regulation No. 109 of 2025

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Presidential Regulation No. 109 of 2025 regarding Urban Waste Management through Waste-to-Energy Conversion (“PR 109/2025”) was issued in response to Indonesia’s waste emergency, where in 2023 approximately 60.99% of waste remained unmanaged and disposed of through open dumping systems. ¹ This regulation marks an accelerated effort and a strengthened legal framework to address waste management issues while simultaneously supporting national energy resilience. It revokes and replaces Presidential Regulation No. 35 of 2018 regarding Accelerated Construction of Waste-Processing Electrical-Energy Installations Based on Environmentally Friendly Technologies (“PR 35/2018”), which was deemed ineffective, by introducing a more structured approach.

In this ARMA Update, we provide an overview of the key changes and additions introduced under PR 109/2025.

1. Expanded Scope of Waste Management

   While PR 35/2018 focus primarily on Waste-Based Power Plants (Pembangkit Listrik Berbasis Sampah), PR 109/2025 significantly broadens this scope by introducing the concept of Waste-to-Energy Conversion based on Environmentally Friendly Technologies (“PSE”).

   Under this expanded approach, waste processing is recognized as capable of generating various forms of energy, not limited to Waste-to-Electricity Conversion (“PSEL”), but also encompassing Bioenergy Conversion, Renewable Fuel Conversion, and Other By-Product Conversions. ²

   However, PR 109/2025 only provides detailed provisions for PSEL. The specific provisions for PSE Bioenergy, PSE Renewable Fuel Conversion, and Other PSE By-Products will each be determined further by the Minister of Energy and Mineral Resources. ³

2. Centralized Project Governance through BPI Danantara

   A key institutional development under PR 109/2025 is the centralization of the project governance under BPI Danantara and its investment/operational holdings. This represents a strategic shift from the previous PR 35/2018 which placed the main responsibility for waste-to-energy development on regional governments that required to designate regional-owned enterprises (“ROEs”) or organize their own tender to select a business entities. ⁴

   In contrast, PR 109/2025 streamlines governance and coordination by designating BPI Danantara, along with state-owned enterprises (“SOEs”) and their subsidiaries, as the central institutional drivers of waste-to-energy development. Under the new framework, BPI Danantara and its holdings are entrusted with the following key roles:

   1. Conducting the selection of the PSEL business entity; ⁵
   2. Preparing technical and economic studies for project feasibility; ⁶
   3. Executing and managing commercially viable investments. ⁷

   By consolidating procurement and investment responsibilities at the national level, the regulation seeks to accelerate project implementation, ensure financial viability, and standardize technical quality across regions.

   This centralized approach offers several advantages. First, it allows for more efficient project preparation and financing, as BPI Danantara and SOEs have greater institutional capacity and access to capital compared to local governments. Second, it promotes consistency in technology selection and operational standards, reducing the disparities that previously existed between cities. Third, it provides investors with greater confidence, given the involvement of nationally backed institutions capable of mitigating risks and ensuring continuity. Overall, the new framework may reflect a deliberate move toward a more coordinated, bankable, and scalable model for Indonesia’s waste-to-energy program.

3. BUPP PSEL Appointment and Investment Framework

   PR 109/2025 introduces a redefined public–private cooperation model for developing and operating PSEL projects. The designated project sponsor and operator is known as the Badan Usaha Pengembang dan Pengelola PSEL (“BUPP PSEL”), essentially, the private (or mixed) enterprise responsible for developing, financing, constructing, and managing the waste-to-energy facility. ⁸

   Under this new framework, BPI Danantara, through its investment or operational holdings, must conduct a comprehensive technical-economic study for each proposed project. This includes analysing waste supply capacity and calorific value, evaluating site suitability and logistics infrastructure, and assessing technical, financial, and environmental risks. ⁹ Based on these studies, BPI Danantara invites qualified bidders to participate in the BUPP PSEL selection process.

   However, should no eligible bidder be identified based on the procurement process, PR 109/2025 allows direct cooperation between the relevant local government and an interested business entity coordinated by the ministries, to ensure the project moves forward. ¹⁰ To note, the PR 109/2025 has yet to govern further details of such arrangements.

4. Municipality Participation: Criteria and Selection

   Under PR 35/2018, the development of PSEL facilities was limited to one province (DKI Jakarta) and 11 cities across Indonesia. ¹¹

   In contrast, unlike the previous regulation which clearly specified the targeted regions, under PR 109/2025, any city or regency may be selected for a waste-to-energy project, provided that it meets the following criteria: ¹²

   1. Availability of a waste volume supplied by the local government to the PSEL of at least 1,000 tons/day during the PSEL operational period.
   2. Availability of the regional budget (Anggaran Pendapatan dan Belanja Daerah – “APBD”) allocated and realized by the local government for waste management, including the collection and transportation of waste from the source to the PSEL site.
   3. Availability of land for waste management and PSEL construction. In this regard, the land shall be provided by the local government to the PSEL business entity through a loan-for-use mechanism without any charges during the construction and operational periods of the PSEL.
   4. Commitment to drafting regional regulations on cleanliness service levies.

   Municipalities interested in hosting a waste-to-energy project must first submit proposals to the Ministry of Environment (“MOE”). MOE then verifies and evaluates the proposals and selects which cities will proceed. Those cities are formally designated by MOE, and the results will be sent to BPI Danantara as the basis for further technical and economic studies. ¹³

   This criteria-based approach is more flexible than the fixed list of 12 (twelve) cities/district governed under the PR 35/2018. It may encourage competition and lets more regions benefit from the project, as region must compete to demonstrate readiness.

5. Power Purchase Mechanism and Tariff Structure

   Under PR 109/2025, the electricity generated by PSEL is mandated to be purchased by PT PLN (Persero). ¹⁴ For this purpose, a Power Purchase Agreement (“PPA”) must be executed between PT PLN (Persero) and the BUPP PSEL to regulate the purchase of electricity. ¹⁵ The PPA must be signed by PT PLN (Persero) no later than 10 (ten) business days after the BUPP PSEL fulfils all licensing requirements prior to commencing construction, ¹⁶ and it remains valid for a period of 30 (thirty) years from the date the PSEL achieves commercial operation. ¹⁷

   One of the key provisions to be stipulated in the PPA is the electricity purchase price by PT PLN (Persero) once the PSEL reaches its commercial operation date. ¹⁸ Article 19(2) of PR 109/2025 sets the purchase price at USD 0.20 (twenty US Dollar cents) per kWh (kilowatt-hour) for all capacities, excluding the cost of electricity infrastructure provided by PT PLN (Persero). This price is non-negotiable and not subject to escalation. ¹⁹

   It is important to note that under this arrangement, no fines or penalties will be imposed if the contracted capacity stipulated in the PPA cannot be met due to technical issues beyond the control of the BUPP PSEL or insufficient waste supply provided by the Regional Government. ²⁰

   In addition, PSEL projects are prioritized for connection to the PT PLN (Persero) grid, in accordance with the annual contracted energy amount agreed upon in the PPA. ²¹

6. Reporting Obligations

   The BUPP PSEL is required to prepare an annual report consisting of (i) a Waste Processing Report and (ii) a PSEL Operation Report during the operational period of the PSEL.

   The Waste Processing Report must include, at a minimum, information on the amount of waste processed at the PSEL, the results of environmental management and monitoring, as well as any issues, challenges, and recommended follow-up actions. This report is submitted to the MOE.

   Meanwhile, the PSEL Operation Report must contain information regarding the electricity generated from waste processing and must be submitted to the Ministry of Energy and Mineral Resources.

   The annual report prepared by the BUPP PSEL must be submitted in physical and/or electronic form no later than the second week of January of the following year.

7. Supervision and Guidance

   PR 109/2025 outlines a multi-ministerial framework for the supervision and guidance of PSE activities based on its authority and area of responsibility: ²²

   1. The MOE is responsible for supervising and providing guidance on waste management activities, environmental protection and management, as well as evaluating and reporting on the implementation of PSE.
   2. The Minister of Home Affairs oversees and guides provincial and regency/municipal governments in fulfilling their respective regional obligations related to PSE implementation.
   3. The State-Owned Enterprises Regulatory Agency (Badan Pengaturan Badan Usaha Milik Negara – “BP BUMN”) supervises and guides the implementation of SOE or SOE subsidiary assignments within the context of PSE operations.
   4. The Minister of Energy and Mineral Resources provides supervision and guidance related to the implementation of PSE, enforcement of PSE quality standards, evaluation and reporting, as well as licensing matters.
   5. The Minister of Finance oversees and provides guidance on the financing and funding of PSE programs sourced from the State Budget (Anggaran Pendapatan dan Belanja Negara – “APBN”).

   While multi-ministerial coordination may present practical challenges, specifying each ministry’s responsibilities under PR 109/2025 aims to prevent the “turf wars” or to minimize overlaps and institutional conflicts that may hindered development of projects. From investors point of view, this approach may be beneficial since it provides greater certainty regarding which authority is responsible for specific approvals and permits at each stage of project implementation.

8. Transitional Provisions

   PR 109/2025 stipulates that the implementation of PSEL that had commenced prior to the enactment of this regulation shall remain subject to the provisions under PR 35/2018. A PSEL project is considered to have commenced if it has reached one of the following stages: ²³

   1. The regional government has determined the appointed PSEL developer;
   2. A cooperation agreement has been signed between the regional government and the PSEL developer; or
   3. A Power Purchase Agreement has been signed between PT PLN (Persero) and the PSEL developer.

   However, PR 109/2025 allows flexibility for regional governments, PSEL developers, and/or PT PLN (Persero) to adopt the provisions of PR 109/2025 if the ongoing implementation of their PSEL projects is unable to (i) convert waste into electrical energy; (ii) significantly reduce the volume of waste; and/or (iii) significantly reduce waste processing time, through the use of environmentally friendly and proven technologies.

1. The Preamble of PR 109/2025 ↩
2. Article 3 of PR 109/2025 ↩
3. Article 27, 28, and 29 of PR 109/2025 ↩
4. Article 6–7 of PR 35/2018 ↩
5. Article 5 and 14 of PR 109/2025 ↩
6. Article 14 of PR 109/2025 ↩
7. Article 5 of PR 109/2025 ↩
8. Article 1 (14) of PR 109/2025 ↩
9. Article 14 (3) of PR 109/2025 ↩
10. Article 15 of PR 109/2025 ↩
11. Article 3 of PR 35/2018 ↩
12. Article 4 of PR 109/2025 ↩
13. Article 13 of PR 109/2025 ↩
14. Article 5 (2) of PR 109/2025 ↩
15. Article 19 (1) of PR 109/2025 ↩
16. Article 19 (7) of PR 109/2025 ↩
17. Article 19 (8) of PR 109/2025 ↩
18. Article 19 (6) b jo. Article 19 (4) of PR 109/2025 ↩
19. Article 19 (6) a of PR 109/2025 ↩
20. Article 19 (6) c of PR 109/2025 ↩
21. Article 19 (6) d of PR 109/2025 ↩
22. Article 30 of PR 109/2025 ↩
23. Article 31 of PR 109/2025 ↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. 1. Expanded Scope of Waste Management
2. 2. Centralized Project Governance through BPI Danantara
3. 3. BUPP PSEL Appointment and Investment Framework
4. 4. Municipality Participation: Criteria and Selection
5. 5. Power Purchase Mechanism and Tariff Structure
6. 6. Reporting Obligations
7. 7. Supervision and Guidance
8. 8. Transitional Provisions

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