T

he government is preparing a legal instrument that will allow PT Pertamina Geothermal Energy (PGE), a subsidiary of oil and gas company Pertamina, to develop geothermal-fueled power plants without a tender.

The policy aims to speed up the development of the use of geothermal energy in power plants.

The Energy and Mineral Resources Ministry'€™s director general for new and renewable energy and energy conservation, Rida Mulyana, confirmed the plan, saying that the regulation was expected to be completed before the end of the year.

'€œWe have met Pertamina to discuss giving a direct assignment for geothermal working areas to state-owned enterprises. We will give it to Pertamina, but operations will be carried out by PGE as the company'€™s subsidiary,'€ Rida said.

Under current practice, the new and renewable energy and energy conservation directorate general regularly holds bids for concessions on a number of geothermal working areas in the country.

In July, for example, the directorate general opened tenders for five geothermal working areas with a total estimated potential of 730 megawatts (MW). The areas are in Kepahiang in Bengkulu, Marana in Central Sulawesi, Way Ratai in Lampung, Mount Lawu on the border between Central and East Java and Lake Ranau on the border between Lampung and South Sumatra.

Thanks to its geographical location in the '€œring of fire'€, with numerous volcanoes, Indonesia has geothermal potential of up to 29,475 MW. However, development of geothermal energy into electricity is frequently hampered by issues including environmental concerns and financing.

The country currently receives 1,438.5 MW from installed geothermal power plants, no more than 5 percent of the total potential.

The directorate general'€™s chief of geothermal power, Yunus Saifulhak, said the direct appointment of PGE to carry out the projects was expected to boost geothermal utilization in Indonesia.

'€œThis is a breakthrough to accelerate geothermal projects. To date, geothermal development is left to stagnate in tenders. When the regulation is passed, we will have several options, from open bids to appointing Pertamina,'€ Yunus said.

He added that as long as Pertamina, through PGE, considered itself capable of working on a given geothermal working area, the government would give the direct assignment to the company, avoiding a protracted tender.

According to Yunus, there are currently 27 geothermal working areas available, with five tendered this year. Eight working areas will be available for bids next year.

'€œOnce we have issued the regulation as a legal instrument, we won'€™t have to put all of the working areas out to tender. Instead we can assign a state-owned firm,'€ he said.

PGE president director Irfan Zainuddin, meanwhile, has said his company aims to be the biggest producer of electricity from geothermal resources, with total production of 682 MW by 2017.

The company'€™s current capacity is 437 MW and it is aiming to produce up to 2.3 gigawatts of electricity from geothermal power plants by 2025.