Extended Deadline to Begin Exploitation or Return Geothermal Mining Working Areas

Government Regulation No. 70 of 2010 (‘Regulation’) was recently issued to amend Government Regulation No. 59 of 2007 on Geothermal Business Activities (‘2007 Regulation’). The Regulation extends the deadline to return non-utilized geothermal mining working areas (‘Working Area’) to the state as stipulated in Article 86 of the 2007 Regulation.

Geothermal activities must be conducted in a certain Working Area. Minister of Energy and Mineral Resources plans, prepares, and sets the Working Area after reviewing and analyzing the data from the initial survey and/or exploration. Private sector entities that are interested in being involved in the subsequent geothermal development of an area must then bid for the procurement contract in a tender process, that is described in great detail within the 2007 Regulation. Once a business is awarded a Working Area, they must obtain the respective mining and business licenses before being able to explore and exploit the geothermal energy resources.

Previously, the 2007 Regulation stated that the holder of a concession, geothermal business license for a power plant, or a geothermal resources business contract and/or steam purchasing contract, in a certain Working Area would have to commence its exploitation activities at the latest on 21 October 2010. Failing to meet this deadline would result in the concession, license, and/or contract holder having to return the Working Area to the state.

However, the delays that the bureaucracy has created in the issuance of recommendations and geothermal business licenses has affected the plans to commence exploitation activities. Additionally, this situation may also, albeit indirectly, affect the government’s efforts to provide adequate electrical supplies to public. Thus, the Regulation extends the deadline from 21 October 2010 to 31 December 2014.

For a brief overview of the 2007 Regulation dealing with geothermal energy development see ILD Number 154 30/4/2010.

The 2010 Regulation has been in force since 20 October 2010.