Garut regency demands Rp 50 billion from geothermal

The local government of the Garut regency in West Java has demanded the government to pay an initial compensation of about Rp 50 billion from the production of geothermal in the regency, Kompas reported on Saturday.

The demand was made during a negotiation on Friday between the Garut administration, the ministry of energy and mineral resources and ministry of finance on the rights of the local authority to receive part of the royalties from the geothermal production in the regency.

Director General of Energy and Mineral Resources Simon F. Sembiring said following the meeting that the Garut regency had asked for an initial payment of about Rp 50 billion as a guarantee before the negotiation team made its final decision.

According to him, the Rp 50 billion in cash demanded by the Garut administration is based on the government's revenue from the sale of geothermal steam to PT Chevron Texaco

Indonesia which operates three geothermal power plants - Darajat I, II and III -- in the regency.

He said that the negotiation team was still assessing the regulations that could accommodate the revenue sharing scheme to be applied on geothermal production with the Garut administration.

"We are still discussing whether the revenue sharing scheme is based on the government's 34 percent royalties or from other sources," he said.

The negotiation team was established after the local government refused to issue a permit for the expansion of the existing geothermal production activities on the ground that the projects have brought no benefits to the local people.

At present, the central government received revenue of at least Rp 70 billion from the regency's geothermal production but none of the money went to the local

government's coffer. The local government only received community development funds from the existing geothermal producers. (*)