This publication highlights Indonesian Financial Services Authority (“OJK”) Regulation No. 6 POJK.04/2017 (“POJK”), which specifies the accounting treatment for sales and purchases of electricity under so-called Power Purchase Agreements (“PPAs”) for listed or public companies engaged in the provision of electricity for public services, as well as listed IPPs supplying electricity to that listed or public companies. This POJK overrides the accounting analysis on rights and obligations specified in PPAs, which generally falls under either ISAK 8 or ISAK 16, and concludes that PPAs are to be accounted for as sales and purchases of electricity in the consolidated financial statements of entities under OJK oversight.
This POJK also clarifies that “generally accepted accounting principles” are the applicable financial reporting framework for listed or public companies subject to this POJK, and that accounting pronouncements issued by OJK prevail, in case if there are differences between PSAK/ISAK and OJK pronouncements.
This POJK is effective from 1 January 2017, with a prospective transitional provision. Early adoption is permitted and can be applied prospectively from 1 January 2016. Nonetheless, listed or public companies subject to this POJK are required to revert back to apply relevant PSAK/ISAK for PPA prospectively when mandates from the specific Presidential Decree for acceleration in the development of electricity infrastructure elapse or cease to exist.
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