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Energy, finance ministries talk geothermal incentives
The energy and finance ministries are discussing potential geothermal incentives, including tax cuts, as a way to attract more investors to achieve its ambitious energy transition goals.
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A motorcyclist passes a road on Nov. 15, 2020 near a geothermal power plant operated by PT Geo Dipa Energi (Persero) in the Dieng highlands in Banjarnegara, Central Java. (Reuters/Willy Kurniawan)
T
he Energy and Mineral Resources Ministry is discussing potential incentives with the Finance Ministry in an effort to attract more geothermal plant investment to the country, which could include reductions to land and building tax, value-added tax and income tax.
Renewables Director General Eniya Listiani Dewi said the ministry would not revise geothermal levies under its authority, including the production fee, production bonus and fixed fees, as these were “stipulated in law.”
“In relation to fiscal and tax [policies], there are ongoing discussions to reduce [taxes] because we want to accelerate geothermal investment,” Eniya said on Tuesday, as quoted by Bisnis.com.
“We will discuss [the matter] with the Finance Ministry, and [this] requires in-depth [evaluation],” she added.
Read also: Pertamina NRE to boost geothermal capacity with eye on carbon trade
Indonesia has the world’s second-largest geothermal potential at an estimated 23,965 megawatts (MW), but only around 10 percent is being utilized at present, according to Pertamina Geothermal Energy, a subsidiary of state-owned oil and gas holding company Pertamina.
Experts told The Jakarta Post that the domestic geothermal industry was hedged in by high development costs and uncertainty about offtake pricing, which clouded the economic prospects for undertaking local projects.
