Govt prepares new geothermal rules

JAKARTA (JP): The government is preparing a new regulation to boost the development of geothermal resources and lower geothermal power prices, according to Minister of Mines and Energy Kuntoro Mangkusubroto.

Kuntoro announced on Friday that under the planned presidential decree, all geothermal power projects would be competitively tendered in order to create fair power prices.

The government will also explore the country's geothermal resources and offer the geothermal fields to independent power producers for exploitation and power generation.

This new scheme will reduce the amount of investment for geothermal development and subsequently reduce geothermal power prices.

"Investor risk will be reduced and be shared with the government at the exploration stage," Kuntoro said.

He said the government was determined to develop the country's geothermal resources because it is a clean and renewable energy source and the country has huge geothermal resources of 20,000 megawatts.

State oil and gas company Pertamina holds a monopoly on geothermal resources under a 1991 presidential decree.

The state company may contract private companies to explore and exploit geothermal resources as well as to generate electricity using geothermal steam and sell the electricity to state electricity company PLN or to other industries.

PLN has thus far signed power purchase agreements to buy power from 11 geothermal power plants located in Sarulla and Sibayak, both in North Sumatra; Salak, Patuha, Karaha, Kamojang, Wayang Windu, Cibuni and Darajat, all in West Java; Dieng in Central Java; and Bedugul on Bali.

All the geothermal power projects were awarded without tender.

Geothermal contractors sell their power to PLN for an average 7 U.S. cents per kilowatt hour, higher than the average price of power charged by contractors of coal and gas-fired power plants.

Analysts attribute the high price for geothermal power to the fact that geothermal contractors received their projects without competitive bidding and they spend a lot of investment in exploration. (jsk)