Govt to Issue Implementing Regulation on Geothermal Law

 
Robert Sidauruk, Kartini Laras Makmur
 
The government, via the Ministry of Forestry, has said that the implementing regulations for Law No. 21 of 2014 on Geothermal Energy (“Geothermal Law”) are imminent and that it is confident they should be issued by the end of this year, despite there being less than two monthsto meet this deadline.
 
Widyastuti, Head of the Division of Laws and Regulation at the Ministry of Forestry, has indicated that a technical regulation on Geothermal Law has been placed on the prioritized drafting agenda at the Ministry of Forestry.
 
“It is hoped that the regulation will be issued by 31 December 2014, as this is the deadline,” informed Mrs. Widyastuti, during a seminar titled “Geothermal Law: Regulations, Licensing, and Investment Opportunities” held by Hukumonline and Assegaf Hamzah & Partners on Tuesday in Jakarta.
 
Mrs. Widyastuti also highlighted several existing regulations that must be amended, so that the Geothermal Law can be effectively implemented. One such example is Government Regulation No. 28 of 2011 on the Management of Natural Reserve Areas, which states that mining activities cannot be conducted in natural reserve areas.

However, after the Geothermal Law was passed, geothermal activities are no longer classified as mining activities and may now be performed in forestry areas.
 
“Mining activities are prohibited from being carried out in natural reserve areas. Therefore, the government regulations must be adjusted to the new Geothermal Law,” said Mr. Widyastuti.
 
The licensing procedures for geothermal business is the main objective of the new technical regulation. Mrs. Widyastuti contends that the government will simplify the licensing process for geothermal activities by establishing time limits for regional governments to issue the required recommendation.
 
Investment Costs
On the same occasion, Robert A. John, Head of the Legal Division at the Directorate General of Renewable Energy and Energy Conservation, also pointed out the issue of the considerable investment costs required for the geothermal energy sector. He explained that the geothermal business is classified as a high cost and high risk investment, which makes potential investors think twice before entering the market.
 
“The minimum investment in the geothermal sector is USD 30 million,” informed Mr. John.
 
To address this issue, the government has said it intends to provide incentives for geothermal businesses. These facilities, according to Mr. John, may be given in form of both the preliminary survey and determination of work areas being organized by the government via its geology agency. In addition, further incentives will be given in the form of fiscal and non-fiscal support.
 
While appreciating the government’s intention to address the licensing and investment cost issues, Kanya Satwika, a partner at Assegaf Hamzah & Partners, reminded the government that the implementing regulations of the Geothermal Law should be aimed at assisting investors to be able to undertake the necessary activities in the geothermal sector.
 
“The new regulations should not add burdens on investors,” concluded Mrs. Satwika.
 
(For more information on Geothermal Law see ILD No. 373)
 
(hot/kc)