PLN in negotiations with geothermal power investors

Investors involved in the development of geothermal energy in Indonesia are still in negotiations with state electricity firm PLN over the price of electricity they would sell to it, a senior executive of International Geothermal Association (IGA) said on Thursday.

IGA acting chairman Riki Ibrahim said geothermal power firms would have to sell their products at quite high prices so as to offset their obligation to pay value added taxes (VAT).

?They are still in negotiations. Investors insist that they be freed from paying value added taxes when they are still at the exploration stage,? Riki told reporters.

The directorate general of taxes had ordered geothermal power firms and oil and gas companies still at the exploration state to pay VAT from early 2000.

Geothermal power companies strongly protested the ruling arguing that their contracts with the government exempt them from paying VAT until they start commercial operation.

PLN is now continuing negotiations with geothermal energy firms whose projects were suspended by the government in 1998 after severe economic crisis hit Indonesia.

The company in early 1990s agreed to purchase power from 27 independent power producers, of which 12 were geothermal power producers. (Godang)