Exclusive right on geothermal resources lifted
JAKARTA (JP): The government has lifted the decade-long monopoly by state oil and gas company Pertamina on the country's geothermal resources and transferred the management of the resources to the regions.
Under Presidential Decree No. 76/2000 issued won May 31, 2000, a copy of which was made available to The Jakarta Post on Thursday, the regional authorities hold the right to license the development of the country's geothermal resources.
The regional authorities also have right to supervise geothermal projects in their respective territories or cancel the projects, according to the decree.
Geothermal contracts will be valid for 30 years but regional administrations may extend the contracts at the request of investors.
Both private companies and cooperatives are allowed to develop the country's geothermal resources for power generation for themselves or the public.
The regional administrations and the central government will share the royalties, payable by investors.
Under the decree, geothermal investors have to comply with Tax Law No. 10/1994 as far tax payments are concerned.
The decree noted, however, that the geothermal development contracts signed by Pertamina prior to the issuance of the decree were still valid. They still pay taxes to the government in accordance with the regulations set out in Presidential Decree No. 49/1991.
Pertamina was granted the monopoly right on geothermal resources by the government in 1981 through Presidential Decree No. 22/1981. Under this decree, private companies were not allowed to generate power from geothermal steam.
In 1991, the government amended the decree with Presidential Decree No. 45/1991 which allows Pertamina and its contractors to explore and exploit geothermal resources as well as to generate electricity using geothermal steam and sell the power to state electricity firm PLN or to other industries.
Pertamina obtained part of the royalties paid by contractors to the government as a management fee.
The 1981 decree only produced two geothermal power projects: the Salak Units 1, 2, and 3 power plants with a total capacity of 165 Megawatts (MW) and the Darajat Unit 1 power plant with a capacity of 55 MW. Both are located in West Java and are already operating under PLN's subsidiary, PT Pembangkitan Tenaga Listrik Jawa Bali I (PJB I).
Pertamina cooperated with Unocal Geothermal Indonesia to exploit Mount Salak's geothermal resources and with Amoseas Indonesia Inc. to exploit Darajat's geothermal resources.
The 1991 decree has thus far produced 11 contracts to develop geothermal power plants across the country, including in Sarulla and Sibayak, both in North Sumatra; Salak, Patuha, Karaha, Kamojang, Wayang Windu, Cibuni and Darajat in West Java; Dieng, in Central Java; and Bedugul in Bali.
All the project owners have signed power purchase agreements with PLN.
But most of the geothermal projects were suspended by the government in 1997 and 1998 as part of retrenchment measures to cope with the economic crisis.
Indonesia has one of the world's largest potential geothermal resources of to 19,000 MW, only about 350 MW of which has been used for power generation.
The new decree gives Pertamina a two-year period of transition, during which the company is still allowed to manage the country's geothermal sector while gradually transferring all the documents related to geothermal exploration and exploitation to the Ministry of Mines and Energy. (jsk)