Govt to set up agency to handle geothermal power

Govt to set up agency to handle geothermal power

JAKARTA (JP): The President is expected to issue a decree
later this year to establish a one-stop regulatory agency for the
geothermal industry, to encourage power generation using
geothermal steam.

"The draft of the presidential decree is now being considered
by the State Secretariat. Hopefully, the decree will be issued
later this year," the Ministry of Mines and Energy's director
general of electricity and new energy development, Zuhal, said
yesterday.

Speaking to reporters after opening the Electric & Energy
Exhibition 1996 here, Zuhal said that the decree would allow the
government to establish a one-stop agency to supervise the
development of geothermal businesses in Indonesia.

Zuhal said it was unclear if the agency would be administered
by the Ministry of Mines and Energy or by a directorate general
of the ministry.

"But the most important thing is that investors will only deal
with the planned one-stop service agency in processing licenses
in the geothermal industry," he said.

He said investors in geothermal industries now had to deal
with the state-owned oil and gas company Pertamina, the state-
owned electricity company PLN, the Ministry of Mines and Energy
and other government agencies.

"A one-stop service will help investors be more efficient and
reduce costs for electricity generation with geothermal steam,"
he said. He did not elaborate.

Recently, the chairman of the Indonesian Geothermal
Association, Prijanto, told The Jakarta Post that investors' main
concerns in developing geothermal energy were the costs.

"Relatively speaking, geothermal energy is not yet competitive
with other energy resources, such as coal and gas, in generating
electricity," he said.

Incentives

He said that if the government gave tax incentives to
geothermal energy investors, the cost of generating electricity
by geothermal steam could be reduced by 2 U.S. cents to 5 U.S.
cents a kilowatt hour (kWh), compared to the average cost of 6
U.S. cents for coal-fired power generation.

But Zuhal said the government would not offer any incentives
for the time being: "Our concern is to create efficiency with a
view to reducing costs in the geothermal business. And providing
a one-stop service is one way to achieve that."

He said the government would hire an energy consultant to
study the possibility of reducing the costs of electricity
generation using geothermal steam to 6 U.S. cents a kWh or below.

He said the government would continue to help companies
develop geothermal resources as an alternative source of
electricity in Indonesia, which has rising energy demands.

At the Indonesian Petroleum Association's (IPA) 25th
anniversary here Tuesday, President Soeharto said that Indonesia
should try its best to delay becoming a net oil importer by
exploiting other energy resources, including geothermal steam.

"Unlike other energy sources such as oil, coal and gas,
geothermal energy cannot be exported. But if Indonesia maximizes
its utilization, the country can save other energy resources for
exports," Zuhal said.

Using geothermal steam to operate a 1,000 megawatt (MW) power
station can save around 300 million barrels of oil a year. Oil is
the country's most common source of energy.

Only 309.5 MW of Indonesia's total geothermal potential
capacity of 19,600 MW have been developed. The 309.5 MW are
generated by three geothermal power stations in Kamojang and
Darajat in West Java and Dieng in Central Java.

The four-day Electric & Energy Exhibition 1996, organized by
Mitra Teknologi Indonesia Foundation, features 38 electricity and
energy companies and institutions from Indonesia, the United
States, Germany, the Netherlands, Austria, Hungary, Britain,
Japan and Singapore. (13)