Geothermal Investors Want Additional Government Guarantees

Jakarta Globe, Ririn Radiawati Kusuma, September 14, 2011

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Indonesia’s ambitious plan to boost power capacity by 10,000 megawatts in three years might be in jeopardy because of additional geothermal investor demands, an executive said.

The government issued a regulation early this year that stipulated state-owned Perusahaan Listrik Negara would buy electricity from geothermal power plants at less than $9.70 per kilowatt hour but at a rate higher than for coal.

The finance ministry then issued a ruling that would back PLN’s financial condition should PLN face bankruptcy.

But investors aren’t satisfied with the decrees and want a promise that PLN will buy geothermal energy in any price, said Saunusi Satar, vice president for external affairs of Star Energy, on Wednesday.

“We have done the exploration activities which involves a lot of risk. We demand a full guarantee in all of our geothermal activities,” Sanusi said. “PLN should buy power at any price.”

Geothermal plants that face possible construction delays include Supramu Energy, Star Energy, Bakrie Power, Tata Power, and Golden Spike.

Sanusi explained that the companies would not start drilling into the geothermal well until the demands are met.

Star Energy has set aside $210 million to invest in Wayang Windu unit 2, with capacity of 227 megawatts, from the geothermal block in West Java, Sanusi said, and moving from the exploration stage to power production takes approximately four to five years.

“It may be completed after 2015, I think,” Sanusi said, meaning the government’s 2014 goal will not be met.

The government’s 2014 power plan includes 4,000 megawatts from geothermal sources.

Muhammad Sofyan, head of renewable energy division at PLN, said that private companies should not be worried with PLN’s ability to purchase power.

“We are committed to buying the power from geothermal power plant,” Sofyan said, adding that PLN also plans to boost geothermal as the second biggest energy source by 2020.