Update 1: Govt mulls giving tax incentives to geothermal investors
Friday, June 30 2006 - 10:55 AM WIB
The Ministry of Energy and Mineral Resources is proposing tax incentives for investors interested in building power plants using geothermal steam in order to boost the development of the nation?s abundant geothermal resources.
The ministry?s geothermal director Sugiarto said on Friday that the proposal was contained in the governmental regulation on geothermal resources already drafted by the ministry.
He said geothermal resource was unique in nature due the fact it is unmovable and could only be used to generate power ? as such the only buyer of the commodity is state electricity company PT Perusahaan Listrik Negera (PLN). In view of the limited buyer, investors need tax incentives to boost their earnings.
The ministry proposes in the draft governmental regulation that geothermal power investors be exempted from import tariff and sales tax.
?We have finished the draft regulation and have sent it to the State Secretariat for review and approval,? Sugiarto said.
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.
When asked about the interest of investors in the country?s geothermal resource, Sugiarto said publicly-listed company PT Medco Energi International and Chevron were among the companies that show interest to invest or continue investing in the sector.
While Medco is aggressively looking for geothermal fields across the country, Chevron is interested in further developing its existing geothermal field.
?Medco is interested in geothermal resource in Tangkuban Perahu in West Java and Maluku. And there is also an indication they (the company) is going to Aceh (to look for geothermal fields),? he said.
PLN recently announced it would award Medco with a contract to develop a geothermal power plant in Sarulla, North Sumatra. (Godang)