Government drafts new regulations on geothermal production bonus, direct utilization

The government is currently drafting a new regulation on geothermal production bonus, and another on direct utilization of geothermal.

The Directorate General of New and Renewable Energy said in a statement late last week that on November 11, a gathering was held participated by the head of mining and energy office from provinces and regencies across the country to discuss the new regulations.

The new regulation on geothermal production bonus will provide legal guarantee for producing regions to be able to directly enjoy the benefit from their geothermal resources particularly at the regency level so that the local people can have a sense of ownership in the geothermal projects, and to trigger conducive investment climate.

Among of the key contents of the new regulation include the size of the production bonus, and the transfer mechanism to the producing regions.

The new regulation on direct utilization of geothermal will regulate the use of geothermal outside the traditional electricity sector such as tourism, agribusiness, and industries, to be managed by the local administration.

The directorate said that a new draft regulation on indirect use of geothermal (for electricity) has also been promoted with a number of breakthroughs as follows.

Authority of geothermal management has been transferred to the central government;
1. The government assigns state-owned firms such as PT Pertamina (Persero), PT PLN (Persero), and PT Geo Dipa Energi (Persero) to carry out exploration, exploitation and utilization without tender mechanism;
2. Opportunity provided for private firms to carry out preliminary survey and exploration through the drilling of at least three holes. If successful, the private firm can have direct selection right;
3. In tender mechanism, price of electricity is no longer the competing factor, but work program and exploration commitment. The electricity selling price is provided by the government in the form of feed in tariff so that the power sale and purchase agreement is made based on exploration results.

Editing by Reiner Simanjuntak