Govt plans to replace leasehold scheme with profit-sharing scheme for geothermal investors

The government will allow investors to develop geothermal resources in conservation areas without leasehold permit as part of the incentives to boost the development of the energy sources, Kontan daily reported on Tuesday.

Darori, Director General of Forest Protection and Nature Conservation at the Ministry of Forestry, was quoted by the daily as saying that under the new policy, geothermal investors need only to share their profits to the ministry as payment of conservation fee.

?Thus, developers of geothermal resources in conservation areas will no longer need to get a leasehold permit from but, instead, share their profits with the ministry,? Darori said on Monday.

Under the existing regulations, all investors need to secure leasehold permits from the Ministry of Forestry before exploiting resources in conservation areas. Investors are however reluctant to apply for the permits due to the requirements that they have to buy lands in other areas and turn them into forests in compensation for the use of the conservation forests.

According to Darori, the new policy will be spelt out in the revision of Government Regulation No. 68/1998 on Nature Reserves and Nature Conservation Zones, which is being drafted by the ministry. ?We hope to finish the drafting this year,? he said.

Darori said the government broached the profit-sharing ideas in view of the damage caused by many mining companies on their mining areas. Many mining companies fail to reclaim their mining areas and leave the areas damaged after completing their operations. Furthermore, the government hopes to increase the amount of its funds for conservation thank to the new policy. Today, the government can only afford to spend US$2 per hectare for forest conservation programs.

The Indonesian Association of Gothermal (APBI) welcome the drafting of the new regulation.

APBI chairman Suryadharma said the leasehold obligation has become a big problem for geothermal investors because under the leasehold scheme, geothermal investors have to buy lands on the same island where they operate. Many geothermal resources are located in in Java, while there are few lands on the island that investors can buy in compensation for the use of conservation forests for their projects.

He, however, called on the government to be "wise" in seting up the profit-sharing scheme, warning that if they government asks for too much share, it will result in the increase in the price of geothermal power. (*)