RI plans to give incentives to environment-friendly investors

Nusa Dua, Bali (ANTARA News) - The Indonesian government is planning to provide incentives to investors wishing to use environment-friendly technology, raw materials, energy and production process, an investment official said.

"We need to seek a solution. On one hand investors are needed to help eradicate poverty, while on the other they are also held responsible for the environment. In the past, we gave incentives to make Indonesia competitive and now we are planning to give incentives to make them responsible for the environment," Chief of the Investment Coordinating Board (BKPM) Muhammad Lutfi said on the sidelines of the United Nations Framework Convention on Climate Change (UNFCCC) here on Monday.

He stopped short of revealing the model of incentives but added the incentives are part of the government`s effort to share the private sector`s responsibility for conserving the environment.

So far, environment-friendly investment is made in the country`s geothermal power plants, he said adding that the investment in the sector is expected to increase to US$2 billion in the next two to three years.

"Our geothermal energy sources have the potential of generating 16,000 MW. The Java-Bali power grids now have the capacity of generating 17,000 MW. This means that we still have the chance particularly because geothermal energy has zero emission or zero waste," he said.

He said the construction of a geothermal power plant needs huge investment so that geothermal electrical power is expensive.

"The price of geothermal electrical power under the agreement signed between 1991 and 1995 is 7.7 cent dollar per kWh because the investors still have to dig wells. Afterwards, they will build a power plant. Indeed the power plant has zero emissions. But it is impossible to split it. Therefore, the government decided to provide incentives so the last price is below 5 cent dollar. The difference is shared by the government and the private sector," he said.

He said a number of investors from Japan, the US and Indonesia have expressed interest in building geothermal power plants with a combined investment of nearly US$800 million.