Energy in Malaysia is three regulatory regimes, not one. Upstream oil and gas sits with PETRONAS under the Petroleum Development Act 1974. Electricity generation, transmission, distribution and supply sit with the Energy Commission under the Electricity Supply Act 1990. Renewables sit across SEDA, the Energy Commission and a set of procurement schemes that have been revised materially in each of the last three years. A contract drafted for one of these regimes does not automatically work in another.

Who regulates energy in Malaysia?

Four different bodies, depending on what you are doing and where.

Sarawak is the exception that catches people out. The Electricity Supply Act 1990 was suspended in Sarawak, which operates its own electricity supply framework. Assuming a Peninsular structure works in Kuching is an expensive assumption.

What licence do you need to operate in Malaysian oil and gas?

A PETRONAS licence. The Petroleum Development Act 1974 vests ownership of Malaysia's petroleum resources, onshore and offshore, in PETRONAS, and participation in the industry runs through PETRONAS rather than through a state concession.

In broad terms there are two routes. A party wanting to explore and produce contracts with PETRONAS, typically under a production sharing contract, alongside the licence to explore. A party wanting to supply equipment, facilities or services to upstream operations needs a licence to supply. Downstream supply generally runs on registration rather than a full licence. Local incorporation and equity conditions attach to certain activities, so the corporate structure needs to be settled before the licence application, not after.

What licence do you need to generate or supply electricity?

Under the Electricity Supply Act 1990, no person other than a supply authority may operate an installation, or supply electricity to another person, except under a licence issued by the Energy Commission — subject to prescribed exemptions. That covers independent power producers, but it also catches arrangements people do not always think of as "supply", such as selling power to a neighbouring tenant or across a site boundary.

If your project involves generating power that anyone other than you will consume, the licensing position should be confirmed with the Energy Commission before the commercial terms are agreed.

How does a corporate renewable PPA work in Malaysia now?

Through CRESS — the Corporate Renewable Energy Supply Scheme — launched in September 2024, with guidelines issued by the Energy Commission. CRESS gives a renewable energy developer third party access to the grid so it can supply a corporate consumer directly under a physical power purchase agreement, with a system access charge paid for use of the grid. Participation was initially aimed at new grid users and was opened to existing electricity consumers from March 2025. CRESS succeeded the Corporate Green Power Programme, which worked on a virtual PPA and contract-for-difference basis rather than physical supply.

This is a fast-moving area. Refinements to CRESS were announced in 2026 alongside changes to self-consumption solar schemes and dispatch arrangements. Treat any published summary — including this one — as a starting point, and confirm current eligibility, capacity limits and charges with the Energy Commission before structuring a deal around them.

What should a PPA or offtake agreement actually settle?

These are twenty-year documents. The clauses that matter are the ones covering years three to eighteen, not year one.

Where do energy projects most often go wrong legally?

In our experience: a bid consortium with no agreement on what happens if the bid succeeds and one member cannot fund its share; an EPCC contract with payment terms drafted as though adjudication under the Construction Industry Payment and Adjudication Act 2012 did not exist; financing security taken over a concession that is not assignable without the grantor's consent; a change-in-law clause narrow enough to miss a change in scheme guidelines; and a Peninsular structure applied to a Sarawak project. Our guide to red flags in legal due diligence covers the wider pattern.

Frequently Asked Questions

Does the Electricity Supply Act 1990 apply in Sarawak?

No. The Act's operation was suspended in Sarawak, which regulates its electricity supply industry under its own framework. Any project in Sarawak needs to be assessed against that framework rather than the Peninsular position.

Do I need a PETRONAS licence to supply services to an oil and gas operator?

For upstream work, yes — a licence to supply equipment, facilities or services is required to participate. Downstream supply generally operates on registration. Both carry conditions on corporate structure and shareholding for certain activities, so confirm the requirements before you incorporate the vehicle.

Can a Malaysian company buy renewable energy directly from a developer?

Yes, through CRESS, which allows a physical power purchase agreement between a renewable energy developer and a corporate consumer using third party access to the grid. Eligibility criteria and system access charges apply and have been revised since launch, so confirm the current position before committing.

Where to start

If you are bidding, start with a consortium agreement for tenders and projects. If the deal is offtake, see utilities supply and offtake documentation. For concession and privatisation structures, look at build-operate-transfer and concession advisory or public private partnership documentation. For the build and the money, see construction contracts and project and development financing documentation.

This page is general information about Malaysian law and does not constitute legal advice. Energy licensing conditions and renewable energy scheme rules change frequently. Confirm the current position with the relevant regulator or your adviser before acting on any part of it.