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Jakarta Post

Investors reluctant because no govt support

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Thu, February 26, 2015   /  06:11 am

Potential investors are reluctant to start developing geothermal power plants in the country because the government has not shown its commitment to this energy business, according to an executive of an energy company.

Pertamina Geothermal Energy (PGE) president director Rony Gunawan said the government needs to help attract investment in this sector to improve the country'€™s energy sufficiency.

Despite its abundant geothermal energy potential, Indonesia has so far only made use of 4 percent of that potential apparently as a result of minimum government support.

'€œWe need legal certainties in various aspects, including in the usage of natural conservation areas as well as a fixed tariff set by the government,'€ Rony said at a media briefing on Tuesday.

Other things regarded as important to push geothermal energy development include governmental regulations as a basis for fiscal incentives as well as well-organized time periods for permit processes.

PGE corporate secretary Tavif Azimuddin acknowledged that prospective investors for geothermal energy remained reluctant to start investing in the sector as a result of a lack of feasibility and support from the government.

 '€œWe expect the government to display more confidence in its support of developing projects on the ground, so that investors will see the feasibility when they start producing and selling power,'€ Tavif said.

Tavif said exploration had always been regarded as the period with the highest risk so that the government would be needed to take over the drilling process, which would make calculations of capacity easier.

Tavif acknowledged that the government was reluctant to be in charge during the exploration, saying that '€œa failure in a drilling process can produce a loss worth US$10 million and the government probably is not ready for that'€.

Located in the so-called '€œring of fire'€, Indonesia is estimated to have a significant amount of geothermal resource potential of up to 28,000 megawatts (MW), even though Tavif said the figure '€œcan be higher because future explorations can help measure more details'€.

Despite the abundant resources, the country remains heavily dependent on fossil fuels.

The government plans to build numerous geothermal power plants, including plants around 4.97 gigawatts, which is part of the second phase of a fast-track electricity procurement program of 17.92 gigawatts in total.

PGE has a total capacity of 402 MW in electricity output from its geothermal power plants, equal to about 33 percent of the country'€™s total installed capacity of 1,403.5 MW.

Previously, PGE has set aside $432 million for several projects including the construction of new power plants, as well as maintenance and exploration in 2015.

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