PLN, association agree on geothermal price

State owned electricity firm PT Perusahaan Listrik Negara (PLN) and the Indonesia Geothermal Association (INAGA) have reached an agreement on a benchmark price for geothermal power, a senior governmental official said on Thursday.

?PLN and INAGA have agreed on a ceiling price of 8.5 US cents per kWh for geothermal power. The price will be stipulated in a presidential regulation. The drafting of the regulation has been completed and we shall soon submit the draft to the Cabinet Secretary,? J. Purwono, Director General of Electricity and Energy Utilization at the Ministry of Energy and Mineral Resources said.

Initially, PLN proposed a ceiling price of 7.6 cents per kWH, but INAGA insisted on 8.5 cent per kWh. As a solution, the ministry then invited a team of consultants to set a fair price. The consultants however set the ceiling price at 11.2 cents, according to Purwono.

?We think the proposal by INAGA makes more sense. We thus proposed it to PLN and PLN did not mind,? Purwono said.

Investment in the country?s geothermal sector has been hampered by the lingering disagreement on the ceiling price. Few, if any, investors were interested to tap the country?s huge geothermal resources to produce power because the price set by PLN for geothermal power was considered as too low. The agreement on the ceiling price is thus expected to boost investment in the country?s geothermal industry.

Purwono said the government will soon prepare a bidding round for several geothermal concessions across the country. (bernard)