The government has agreed to guarantee geothermal development as part of its fast track program to respond to a looming national power shortage.

Vice President Boediono said in Jakarta on Tuesday that Finance Minister Agus Martowardojo had signed a ministerial decree assuring that state electricity company PT PLN could pay for electricity from independent producers, including geothermal power plants.

He expected the decree to assuage geothermal investors’ anxiety about PLN’s ability to fulfill all the financial obligations that were stipulated in the power purchase agreements (PPA).

The decree stated that geothermal producers would receive letters guaranteeing that PLN would be able to fulfill its obligations, he added.

“Investors have been waiting for this decree for quite some time. They have very strong interests in developing geothermal energy to ge...