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T Supreme Energy, partner of Japan-based Sumitomo Corporation and French international power supplier GDF Suez, has suspended its geothermal power project in Lampung, bowing to local protests, a move that could hurt the campaign to develop alternative energy resources.

Supreme Energy chairman Supramu Santosa said on Wednesday that the escalating protest from villagers living on the slopes of Mt. Rajabasa in Lampung prompted the postponement of drilling for the project, which would eventually lead to construction of a power plant with capacity of 2x110 megawatts (MW).

Drilling will be delayed until January next year.

With the delay, the operation will be at least one year behind the initial schedule.

The power plant, a part of the second phase of the 10,000 MW fast-track program, was previously scheduled to begin operation in 2016.

Electricity from the plant will flow into the Sumatra grid, which reaches from Lampung to Aceh.

Supreme Energy and its partners plan to invest more than US$800 million for both geothermal exploration and the power plant in Rajabasa.

The consortium won the permit to develop the area in 2010.

Supreme Energy has already spent around $30 million on a geothermal study in Rajabasa.

The area is estimated to possess reserves sufficient to produce 220 MW of electricity.

State utility firm PT PLN has an agreement to buy the electricity from the Rajabasa plant at the price of 9.5 US cents per kilowatt-hour once the operations begin.

However, as previously reported, some villagers staged a protest in Jeti village, Rajabasa on Wednesday, demanding that Supreme Energy cease its exploration, claiming that the geothermal project would damage the social structure of the community.

Forestry Minister Zulkifli Hasan has repeatedly said that his office would side with the local residents due to the exploration site'€™s proximity to traditional settlements, adding that Supreme Energy must convince the locals over the safety of the project.

Commenting on this, Supramu said that the energy firm was ready to negotiate the safety of the geothermal project with the villagers, adding that the company had discussed the matter with residents on many occasions.

In addition, he said, the company would also invite the representatives of the villagers to observe the state-owned energy firm Pertamina'€™s Kamojang power plant in Garut, West Java to give them more insight on geothermal projects.

Supramu added, however, that he was quite '€œsurprised'€ by the escalation of the protest, which, he said, only occurred recently.

'€œThis kind of situation may hurt the nation'€™s image among other potential geothermal investors.

'€œPersonally, I am quite ashamed as a local partner [of Sumitomo and GDF] because it can influence their perception of Indonesia,'€ he said.

Separately, the Indonesian Geothermal Association chairman, Abadi Purnomo, said that the government should shut all geothermal projects if top officials remained '€œhalf-hearted'€ in their commitment to investors.

'€œSupreme is one of the pioneers of exploring geothermal potential in Indonesia. If they are disturbed by this kind of protests, of course it will raise questions among investors,'€ he said. Besides the Rajabasa plant, Supreme Energy'€™s geothermal projects include a 2x110 MW power plant in Muaralaboh, West Sumatra due to begin in 2016.

The firm plans $750 million in investment in the project.