Geothermal producers obliged to allocate 10% interest to local govt

Geothermal developers in the country will be required to allocate 10 percent participating interest in their projects to the local administrations as mandated under the Law on Geothermal, Kontan reported on Tuesday.

President Susilo Bambang Yudhoyono signed the law in early August, and the government is currently finalizing the necessary implementing regulation.

?

Tisnaldi, the director for geothermal development at the Energy and Mineral Resources Ministry, said the geothermal developers will be required to first offer the 10 percent participating interest to companies owned by regency or provincial administrations. The second offer will be made to state-owned enterprises. The developers should start making the offer since the issuance of the so-called notice of intend to develop by the local government.

The 10 percent participating interest will give local governments with extra revenue, while on the other hand it will also help geothermal developers in overcoming project risk such as delays in obtaining local permit, and land acquisition process. (*)