Risk-Based Business Licensing Standards for Energy and Mining: PERMENESDM 7/2026

The Ministry of Energy and Mineral Resources has issued PERMENESDM 7/2026, Standar Kegiatan Usaha pada Penyelenggaraan Perizinan Berusaha Berbasis Risiko Sektor Energi dan Sumber Daya Mineral (Business Activity Standards for the Administration of Risk-Based Business Licensing in the Energy and Mineral Resources Sector). The regulation sets out the standards that govern how business actors obtain and keep licences across the ministry's subsectors, and it codifies the administrative penalties that apply when those licences are breached. It operates within the Online Single Submission (OSS) framework that the central government uses to issue business permits.

Pasal 1 establishes the vocabulary the regulation relies on. It defines Risk-Based Business Licensing (Perizinan Berusaha Berbasis Risiko, or PBBR) as licensing that uses a risk-analysis approach derived from assessing each business activity. It separates the Business Licence (Perizinan Berusaha, or PB), which grants the legal basis to start and run a business, from the supporting licence (PB UMKU), which authorises activities that support a business. The same article defines the OSS system as the integrated electronic platform managed by the OSS institution for administering PBBR, and it identifies the business actor as either an individual or a business entity operating in a given field.

Issue

The regulation addresses a single sector that contains several distinct subsectors, each with its own licensing requirements and its own pattern of compliance risk. Electricity, minerals and coal, new and renewable energy, energy conservation, and geology each carry different operational hazards, and a uniform penalty scheme would not match those differences. PERMENESDM 7/2026 responds by tying the standards and the sanctions to the subsector in which the breach occurs.

Key Provisions

The administrative sanctions are organised subsector by subsector. Pasal 8 governs the electricity subsector: a business actor that breaches its PB or PB UMKU obligations may face a written warning, temporary suspension of activity, an administrative fine, or revocation of the licence. The same article provides that where a violation causes casualties or damage to safety, health, the environment, resource use, or other aspects, the sanction escalates to temporary suspension or revocation.

Pasal 9 sets the scheme for the minerals and coal subsector, where breaches may draw a written warning, partial or full suspension of the licensed activity, or revocation. It adds that a licence holder who fails to meet obligations to pay state or regional revenue is subject to an administrative fine under the applicable laws. Pasal 10 addresses the new energy, renewable energy, and energy conservation subsector, distinguishing geothermal activity for indirect use, which follows the geothermal laws, from direct-use geothermal, biofuel, biogas, and energy-conservation activities, each carrying its own ladder of warning, suspension, and revocation. Pasal 11 covers the geology subsector, where a breach of a PB UMKU may lead to a written warning, suspension of groundwater activity, or revocation of the supporting licence.

Supervision is handled by reference. Pasal 6 states that oversight of PB and PB UMKU in the energy and mineral resources sector is carried out in accordance with the applicable laws, which connects the licensing standards to the broader enforcement architecture, including the environmental oversight and inspection rules that apply where activity affects the environment. The escalated penalties in Pasal 8 for environmental harm sit alongside the separate regime of environmental administrative sanctions.

Implications

For business actors across the energy and mineral resources sector, the regulation makes the penalty consequences of a licence breach specific to their subsector rather than general. An electricity operator and a coal producer now read different articles to understand what they face, and both must account for the heightened exposure when a violation produces casualties or environmental damage. The link to revenue obligations in Pasal 9 also means that payment compliance, not only operational compliance, carries a defined administrative penalty. The regulation extends the ministry's wider move toward risk-based permitting, alongside other ministry instruments such as its earlier energy-sector licensing rules.

Regulatory Context

PERMENESDM 7/2026 forms part of the OSS-based licensing system that the central government applies across sectors. By fixing both the licensing standards and the subsector-specific sanctions in one instrument, it places the energy and mineral resources sector within that national framework while preserving the distinctions among its subsectors.

Read the full regulation in the CRPG Law Database.

Methodology: This memo summarises the official regulation text and is not legal advice; report corrections to contact@crpg.info.

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