Local govt can have stake in geothermal project

Regional administrations will be allowed to have a participating interest in geothermal project in their respective region once the project has started production.

The regional administrations participating interest in geothermal projects is regulated under a new geothermal draft law, which is expected to be approved by the House of Representatives in July of this year.

Director General of New and Renewable Energy at the Ministry of Energy and Mineral Resources Rida Mulyana was quoted by Investor Daily as saying Wednesday that with the arrangement, regional administrations can be spared from suffering huge financial losses if the geothermal project fails to make production.

He said that the cost for exploration of one geothermal well is estimated at about Rp 3 trillion. If a local administration has a 10 percent participating interest, it would have to allocate at least Rp 300 billion in their regional budget, a sum that may easily evaporate if the project fails. (*)