Govt will bear royalty fee on geothermal power plants

The government has set royalty fees for geothermal power plants but it will be incorporated into the 34 percent of income tax, which is part of government share, to avoid additional burden placed on power plant operators, Bisnis Indonesia reported Thursday

At present, the government has two options on setting royalty fees in case of geothermal power plants, which will reduce income tax between 2 and 3 percent if calculated from the electricity price and between 4 and 5 percent if calculated from geothermal steam price.

With this, local administration will get share in the form of royalty fee set by the government from the geothermal power plants.

According to a report submitted to the House of Representatives, budget committee by the Ministry of Energy and Mineral Resources, director general for coal, geothermal and minerals, the Ministry of Energy and Mineral Resources and the Ministry of Finance have reached an agreement on the royalty fee from geothermal power plants.

Since it will be incorporated into the income tax, the Finance Minister will issue a new regulation on this issue.

When asked for confirmation, director general of geothermal, coal and minerals Simon Felix Sembiring said his office has proposed the plan to the Ministry of Finance.

Under the present system, the local administrations didn?t receive any royalty from the geothermal power plants.

Indonesia has an abundant geothermal resource that is able to generate more than 20,000 MW of power. Yet, today, the country?s geothermal power plants now only generate a total of 787 MW of power, including 165 MW from American energy firm Chevron Texaco?s Drajat and Salak power plant in West Java, 110 MW from Singaporean firm Star Energy?s Wayang Windu power plant in West Java and 380 MW from power plants owned by PT PLN. (*)