Lawmakers Approve Revised Geothermal Law

Jakarta Globe, Tito Summa Siahaan, Aug 26, 2014

A file photo shows a power plant supported by geothermal energy belonging to
Pertamina Geothermal Energy in Kamojang on April 22, 2010. (AFP Photo/Adek Berry)

Jakarta. Members of the House of Representatives finally approved a revised geothermal law, with the long-awaited decision expected to encourage the exploitation of geothermal energy in Indonesia. Once the president signs the revised law, it will replace the one issued in 2003.

Indonesia only harnesses 5 percent of its estimated 28,617 megawatts of geothermal power as the previous law did not allow for the exploitation of geothermal sources in the country’s conservation forests.  Other issues that hampered the optimal use of this energy source include pricing considered unfavorable by investors, and opposition from indigenous peoples.

According to Ridha Mulyana, director general for renewable energy and energy conservation at the Ministry of Energy and Mineral Resources, there are several key changes in the revised geothermal law.

In terms of the revised law, geothermal exploitation will no longer be considered part of mining activities, Ridha said, adding “With this we can accelerate geothermal energy development.”

The old law classified the exploitation of geothermal energy as a mining activity, thus making conservation areas, where much of the country’s geothermal sources are concentrated, off-limits.

Another important change is that the power to issue permits or conduct tenders related to geothermal energy exploitation is returned to the central government, Ridha added.

Previously, regional governments had the authority to issue such permits or hold tenders, which resulted in bureaucratic complications and often overlap with the central government regulations.

Regional governments, however, will get production bonuses taken directly from the electricity output and they will also have the authority to obtain other financial benefits from geothermal energy, he said.

Ridha said the Ministry of Energy and Mineral Resources will have to formulate new regulations now for implementing the revised law.

“We expect to complete a government regulation on production bonuses this year,” he said.

Nur Pamudji, president director of state utility firm Perusahaan Listrik Negara, welcomed the revised geothermal law.

“It would encourage the development of energy sources as previously off-limits areas can now be exploited,” he said.

Lawmaker Nazarudin Kiemas, who heads the committee on the geothermal bill, added that the passage of the revised law would lead to an increase in investment in geothermal energy as investors will now have better legal certainty.

The Ministry of Energy and Mineral Resources estimates that 42 percent of the nation’s geothermal resources are located in protected forest areas.