Still Waiting, Draft Bill on Geothermal

 
Kartini L Makmur, Robert Sidauruk
 
Vice President Boediono has confirmed that the Draft Bill on the Amendment to Law No. 27 of 2003on Geothermal Law (Geothermal Law) will be passed within this year and during the current President’s term of office. Expectations are that the Draft Bill will finally solve the issues that have continued to hamper the geothermal industry.
 
“The Draft Bill will be completed by the current administration,” said Vice President Boediono in Jakarta on Wednesday.
 
The Vice President also highlighted the fact that Indonesia has over 40% of world’s geothermal reserves. Despite this positive endowment, development of geothermal projects in Indonesia has been slow.
 
The Vice President acknowledged that financial issues are not the only reason for the slow development of geothermal projects and that difficulties related to complex licensing process, bureaucracy, as well as land acquisition have delayed projects.
 
“There are too many authorities involved in a single geothermal project. We need to resolve this, it should not happened in the future,” the Vice President added.
 
The status of the Draft Bill was also confirmed by Jero Wacik, Minister of Energy and Mineral Resources (ESDM). Mr Wacik confirmed that during the hearing session with the House of Representatives last June, there was a proposal to speed up discussions on the Draft Bill from the previously scheduled 1 July 2014.
 
Mr. Wacik also highlighted that a significant provisions of the Draft Bill regards exploration in conservation forest. An ongoing issue has been that most geothermal resources are located in conservation forests and that under the current Geothermal Law, geothermal projects are classified as mining activities which conflicts with the regulatory framework covering forestry.
 
“Currently geothermal projects are classified as mining activities which are prohibited from being performed in forestry areas. To address this, we will amend the Geothermal Law,” added Mr. Wacik.
 
In anticipation of the Draft Bill, Tisnaldi, Director for Geothermal Energy at the Directorate General of New and Renewable Energy, explained that the Government has prepared several regulations to accelerate development of the geothermal industry.
 
The first covers new provisions related to auctions on geothermal project. This is being structured so that auction procedures will only favor bidders with a serious commitment to a project.
 
The second provisions relate to geothermal prices. Under these provisions, it is hoped that geothermal prices will be more attractive, and investors will no longer complain about the economics of geothermal energy.
 
“These regulations will be issued in near future,” added Mr. Tisnaldi.
 
(For more information on the Draft Bill, see ILD No. 304)
 
(hot/kc)