A new presidential decree allowing mining, power plant, transport and renewable energy projects in protected forests was welcomed by companies in those sectors on Wednesday.
PT Pertamina Geothermal Energy said it could now proceed with the construction of geothermal projects that could produce as much as 1,340 megawatts of power.
“We welcome the government decree to allow such projects, especially geothermal power plants, in the protected forests,” said Adiatma Sardjito, a PGE spokesman.
“We are optimistic that we can achieve our target to build 1,340 megawatts of geothermal power plant projects by 2014,” he said.
Adiatma said Pertamina was still in talks with the state-backed Japan Bank for International Cooperation to finance its geothermal projects.
PGE currently operates geothermal plants in West Java and North Sulawesi, with a combined capacity of 272 MW.
Usman Slamet, a manager at Chevron Indonesia, said the company was joining a tender to build a geothermal project in North Sumatra.
Chevron currently operates a geothermal plant in Indonesia, producing about 600 MW.
Increasing exploitation of mineral resources and the acceleration of infrastructure development are seen as keys to boosting growth and creating jobs.
The presidential decree, which came into effect on Feb. 1, has angered green groups given that the country already has one of the fastest rates of deforestation in the world.
The decree said protected forest areas can be used for development activities for unavoidable strategic purposes, and described key development projects as including power plants, renewable energy, toll roads and railways.
The government is tapping alternative sources of energy to meet rising power demand and cut consumption of expensive crude oil as national reserves dwindle. The country has the potential to produce an estimated 27,000 MW of electricity from geothermal sources.
However, that potential remains largely untapped because the high cost of geothermal energy makes the price of electricity generated from it expensive.