P

ertamina Geothermal Energy (PGE), a subsidiary of state oil and gas firm PT Pertamina, has launched a 1,000-megawatt (MW) geothermal energy investment package with financial assistance from the World Bank and the government of New Zealand.

The company’s president director, Slamet Riyadhi, said the World Bank had provided PGE with a US$300 million soft loan for the development of two geothermal fields — Ulubelu in Lampung and Lahendong in North Sulawesi — breaking down to $175 million for Ulubelu and $125 million for Lahendong. He added that the loan’s tenure was 40 years with an interest rate below 3 percent per year.

In addition, he said, New Zealand had given $6.95 million to support the development of the two fields.

“As much as $1 million will be used to conduct a front-end engineering design (FEED). New Zealand will also be lending three experts to work with us for a year until we’re ready to handle the projects on our own,” he told reporters after receiving documentation pertaining to the grant and the loan in Jakarta on Monday.

The World Bank’s country director for Indonesia, Stefan Koeberle, said Indonesia would benefit hugely from possessing a greater capacity to generate power from environmentally friendly sources, and claimed the World Bank was pleased to be able to support this very important expansion in renewable energy use in the country.

“There is also an urgent need globally to lock into low carbon, climate-friendly paths to development, and being home to one of the world’s largest resources of geothermal, Indonesia can make a significant contribution toward this goal,” he argued.

Geothermal is currently the only form of energy capable of displacing coal-based power in more balanced energy generation. It is a clean and reliable energy source that is available in areas where energy demand is significant and growing. The World Bank financed projects are located on the islands of Sumatra and Sulawesi.

New Zealand Ambassador to Indonesia David Taylor said the technical assistance funded by his country’s grant would enhance PGE’s capacity through training, knowledge transfer and capacity building, designed to strengthen its institutional capabilities.

The government of New Zealand also plans to assist the broader industry through a Geothermal Industry Support Program that was in its preparatory stages, he revealed.

“Indonesia is aiming for an impressive expansion of geothermal development, and PGE is leading this charge”, Ambassador Taylor said.

“As another leading geothermal development country, New Zealand is pleased to be able to assist PGE specifically, and Indonesia’s geothermal industry in general,” he added.

Indonesia is home to 40 percent of the world’s geothermal reserves with total potential of 29,000 megawatts (MW) scattered across 276 locations. However, as of today, the country can only utilize 1,226 MW or 5 percent of the total reserves.

On the challenges faced in developing geothermal energy in Indonesia, Taylor reported that last year, both the Indonesian and New Zealand governments had collaborated in conducting a study to identify barriers in the geothermal sector.