On May 14th 2018, the Minister of Energy and Mineral Resources issued Regulation No. 27 of 2018 on Compensation for Land, Buildings and/or Plants Located under Free Electricity Transmission Networks (“ MEMR 27/2018 ”). Previously, compensation for land, buildings and plants affected by the construction of the electric power transmission network was regulated under Regulation of the Minister No. 38 of 2013 on Compensation for Land, Buildings and Plants Located Under High-Voltage Air Channels, Extra High-Voltage Air Channels and in Free Spaces (“ MEMR 38/2013 ”). In Regulation 27/2018, there are several important things that need to be considered, namely the scope of compensation and the formula for calculating compensation.
Compensation is the granting of certain amount of money to the land rights holders along with the buildings, plants, and/or other objects attached on the said lands as the land has indirectly been used for electricity constructions without the relinquishment or handover of the land rights. Compensation is given by the Supplier to the Rights Holder if the land, buildings and/or plants are affected due to the following activities (Article 3 paragraph (2) MEMR 27/2018):
- Construction of new electric power transmission networks;
- Construction of electric power transmission networks in the existing network lanes which includes replacements and/or installation of more towers/poles and/or conductors; and/or
- Construction of electric power transmission networks in the existing network lanes which includes enlargement of so-called free spaces or minimum horizontal clearance when measured from the vertical axis of the relevant tower/pole
In accordance with these criteria, Compensation will be given only 1 (one) time and if the land, buildings, and/or plants that have been given Compensation change hands, the new Rights Holder do not have rights to ask for compensation.
Compensation calculation formula is divided into three categories. Here are the formulas and differences for each category (Article 7 MEMR 27/2018)
15% x Lt x NP
15% x Lb x NPb
Lt : Land size in the relevant Free Spaces
Lb : Building size in the relevant Free Spaces
NP : Land market value as provided by appraisal agencies
NPb : Building market value as provided by appraisal
NPt : Plant market value as provided by appraisal
As can be seen in the formula, there is a market value that will be used as a benchmark in the Compensation formula. The market value is obtained from the results of the assessment of a licensed Appraiser appointed by the Supplier. (ana)
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