Geothermal fund MoU to be signed soon

The Ministry of Energy and Mineral Resources and the Ministry of Finance are expected to soon sign a MoU on the utilization and management of government?s geothermal fund to help accelerate geothermal exploration activities in the country, Investor Daily reported on Monday.

The paper quoted Yunus Saefulhak, Director of Geothermal at the Ministry of Energy and Mineral Resources, as saying that the MoU will spell out the responsibilities of the Ministry of Finance as provider of the funds, and that of the Ministry of Energy and Mineral Resources which will be in charge of overseeing the geothermal exploration activities.

Yunus said that the planned signing of the MoU comes following the issuance of a Minister of Finance Regulation, appointing the ministry?s PT Sarana Multi Infrastruktur (SMI), an infrastructure fund company, in distributing the geothermal fund.

The government has allocated Rp 3 trillion from the state budget for the geothermal fund, in addition to US$55.25 million from the World Bank.

Yunus said that once the MoU has been signed, a committee for geothermal exploration will be set up which will comprise of officials from the Geological Agency, Directorate General of New and Renewable Energy, SMI, and the Ministry of Finance?s Fiscal Agency. ?The committee is intended so as to help ensure the geothermal fund can be implemented accountably, and measured,? he said.

He said that the geothermal fund is first applied to finance drilling activity at the Wae Sano geothermal working area in East Nusa Tenggara province. He, however, said that drilling will only start next year as required forestry permit is still in progress to be obtained.

Meanwhile, Director General of New and Renewable Energy Rida Mulyana said that the geothermal fund is intended to help accelerate geothermal exploration in the country by eliminating the risk to be faced by private investors as exploration activities are financed by government funds.

He said that the high risk in exploration activity has been seen as a major factor hampering the development of geothermal power plants in the country.

Once the exploration activity on a geothermal working area has been completed, the status of the geothermal in the specific area improves to proven reserves. Private investors taking over the particular geothermal working area will have to reimburse the exploration cost, which is then to be used by the government to fund other geothermal projects. (*)