Minister says no incentives for renewables energy project
Friday, March 3 2017 - 02:44 AM WIB
Petromindo|Boim
Minister of Energy and Mineral Resources Ignasius Jonan shrugged off calls for the government to provide incentives for investors developing renewables-based power plants following the introduction of a new electricity tariff policy seen to make investment in the sector less attractive.
Ignasius said on Thursday that the government would not provide incentives such as tax breaks or other tax facilities for investors in the renewables sector. ?Do we have to change the tax law just to accommodate the interest of investors (in the renewables sector)? Not possible, doesn?t make sense,? he told reporters.
He urged the investors to proceed with their planned projects, and not wait for incentives from the government. He added that the government is determined to bring down electricity tariff lower.
He said that incentives may only be given if investors can ensure low tariff of electricity produced from renewables-based power plants, say at between US$0.06 and $0.09 per kWh. He said that so far no investors have come up with such proposal.
Ignasius has recently issued a new Ministerial Regulation No 12/2017, limiting the tariff of electricity from renewables-based power plants to be sold to state-owned utility firm PT PLN at 85 percent of the so-called regional electricity production cost base (BPP). For projects located in regions where the BPP is lower than the national BPP, then the tariff will be set at equal to the regional BPP.
There has been growing protests to the new policy as it would make the electricity tariff lower than set under the previous tariff formula. The Indonesia Renewables Energy Society (METI) sent a letter to the minister last month, saying that the new policy has made investment in the renewables sector to be unattractive unless the government provides incentives including fiscal. METI Surya Darma said that banks considered the new tariff policy has made renewables projects to be not feasible without government incentives. (*)