Geothermal investments will have government guarantee

The government finally agrees to provide guarantee for investments in the country?s geothermal sector in a bid to promote and accelerate developments in the second stage of the 10,000 MW electricity availability campaign.

?Investors have been waiting for this (government guarantee), and they will be more interested in developing geothermal power plants,? said Vice President Boediono on Tuesday when announcing the new government policy.

The Minister of Finance Regulation on the government guarantee for investment in geothermal project was signed on August 22, 2011. It regulates among other things government guarantee on the feasibility of the project, sales and purchase agreement, and bank financing.

The new regulation also requires investors to seek financial closure within 48 months, or would automatically be dropped from the project.

The VP said that the new regulation would eliminate investors? concern over the financial capacity of the state electricity company PLN in fulfilling its financial obligation with regard to the power purchase agreement between PLN and the private power producers.

PLN President Director Dahlan Iskan welcomes the new policy. ?I hope that there will soon be new agreement signings between PLN and geothermal investors,? he said. (*)