$5 billion of deals signed at World Geothermal Congress

Alfian and Desy Nurhayati, The Jakarta Post, Nusa Dua, Bali | Tue, 04/27/2010 10:17 AM

The signing of 12 geothermal-related business contracts worth around US$5 billion marked the opening of the World Geothermal Congress 2010 on Monday, in Nusa Dua, Bali.

“The 12 projects were signed to precede the second phase of the fast-track electricity program,” Coordinating Economic Minister Hatta Rajasa told the congress.

Included in the contracts were cooperation agreements between state power firm PT PLN and PT Pertamina Geothermal Energy (PGE) — a geothermal business branch of state oil and gas company PT Pertamina — to develop four geothermal power plants.

The four projects are: unit IV of the Lahendong power plant in North Sulawesi; units I through IV of the Kotamobagu power plant also in North Sulawesi, unit I and II of the Hulu Lais power plant in Bengkulu, and unit I and II of the Sungai Penuh power plants in Jambi.

“The four projects require a total investment of around $541 million,” PGE president director Abadi Poernomo said. PGE will supply geothermal power to power plants for 4.3 US cents per kilowatt per hour.

“The price will escalate by 2 percent every year,” PLN’s technology and planning director Nasri Sebayang said.

The congress was officially opened by President Susilo Bambang Yudhoyono. Attending the opening ceremony were Iceland President Olafur Ragnar Grimsson, and the president of the International Geothermal Association (IGA), Ladislaush Rybach.

Another business deal signed during the event was a $40 million drilling contract between geothermal producer Star Energy Geothermal Wayang Windu and drilling company PT Resources Jaya Teknik Management Indonesia (RMI).

Under the agreement, RMI is appointed by Star Energy to carry out drilling activity at Star Energy’s Wayang Windu Geothermal field in Pengalengan, West Java.

“The contract will last for two years,” RMI’s president director Rohmad Hadiwijoyo said.

Also on Monday, companies were awarded the rights to develop four geothermal fields and power plants. They are PT Golden Spike Indonesia, PT Supreme Energy, PT Sokoria Geothermal Indonesia and PT Supreme Energy. Golden Spike won the tender to develop the power plant at Ungaran Mountain in Central Java, while Sokoria was appointed to develop the same project in Ende, East Nusa Tenggara.

Supreme Energy was chosen to develop two similar projects in Rajabasa Mountain in Lampung and Solok, West Sumatera.

The four projects are estimated to require a total investment of $1.68 billion. Herman Darnel Ibrahim, chairman of the congress’ organizing committee, said the signed projects were expected to attract more investors to develop Indonesia’s untapped geothermal resources.

“This will send the signal that Indonesia is very serious in developing its geothermal [potential],” he said.

Indonesia’s geothermal capacity is estimated to be around 28,000 megawatts, of which only about 5 percent has been developed.

Surya Darma, chairman of the Indonesian Geothermal Association (INAGA), cited PLN’s monopoly on power distribution as one factor contributing to the under utilization of the energy source.

“If there is only one buyer, the buyer must not give priority to geothermal for their fuel,” he said.