Govt sets higher electricity tariff for Panax Geothermal project
Wednesday, July 25 2012 - 06:16 AM WIB
Australian-listed Panax Geothermal Limited (Panax) said that the Indonesian government has confirmed a significant increase in the electricity tariff that will be payable for Panax?s geothermal energy projects in the country.
The feed-in-tariff for geothermal projects will increase from the current US$97 per megawatt hour (MWh), to US$120 per MWh for geothermal projects in Java, and to US$150 per MWh for projects on the island of Flores.
The increases were announced by Indonesian Energy and Mineral Resources Minister, Jero Wacik, at the recent Indonesia Renewable Energy and Energy Conservation Conference in Jakarta, and have been confirmed subsequently by the President Susilo Bambang Yudhoyono.
Panax said that following recent discussions in Jakarta with PT Dairi Prima Minerals, the company anticipates that the electricity pricing for our Dairi Prima Geothermal project will be increased from the current US$150 per MWh to an expected amount of US$170 per MWh.
Panax is targeting production at Dairi Prima by late 2013 with its production share increasing to 86 MW when all three projects are in full production.
The effect on Panax?s current portfolio of Indonesian Geothermal Projects is expected to be as follows:
| Project | Old Tariff | Expected New Tariff | Expected % increase in Tariff
|
| Sokoria Project | US$ 125 /MWh, plus carbon credits | US$ 150 / MWh, plus carbon credits | 20.0 %
|
| Dairi Prima Project | US$ 150 / MWh, plus carbon credits | US$ 170 / MWh, plus carbon credits | 13.5 %
|
| Ngebel Project | US$90 / MWh | US$ 120 / MWh | 33.0 %
|
?The increase in tariffs for each of these projects will lead to a significant increase in the economic returns for each of these projects,? Panax said in a statement.
Energy and Mineral Resources Minister Jero Wacik said the feed-in-tariff (being the purchasing price of state electricity company PT PLN (Persero) for geothermal power plants) was increased in order to attract more investment to tap into the country?s rich geothermal resource, For a comparison, the current price for fuel-fired power plants used in remote areas is between US$ 350 to US$ 450 cents /MW).
Wacik also said the government would also offer other incentives for investors such as tax holidays during their exploration activities.
PT PLN (Persero) President Director Nur Pamudji said that PLN would abide to the new pricing regulation even though it would slightly increase PLN?s costs in fulfilling the country?s electricity needs. ?We know it is much cheaper than the electricity generated from fuel-fired power plants,? he said.
Editing by Roffie Kurniawan