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An analysis of the new geothermal working areas tender rules for Indonesia

Alexander Richter Alexander Richter 2 Aug 2018

Indonesian law firm UMBRA has released a detailed analysis of the new rules for geothermal working areas tender procedures.

In its latest newsletter, shared yesterday, Indonesian law firm UMBRA has released details on new geothermal working areas tender procedures for Indonesia.

In general, a geothermal working area in Indonesia must be offered to business entities by the central government through a tender process, and a direct appointment is only allowed after a retender where there is only one bidder who participates or only one bidder is qualified. But, under the new regime, the Minister of Energy and Mineral Resources (MEMR) is now allowed to directly assign a public service institution (Badan Layanan Umum/BLU) or a state-owned entity having line of business of geothermal to conduct geothermal activities in a geothermal working area.

The Minister of Energy and Mineral Resources (“MEMR”) has recently issued MEMR Regulation No. 37 Year 2018 on Offering of Geothermal Working Areas, Issuance of Geothermal License and Geothermal Business Assignment (“MEMR 37/2018”) which provides detailed provisions on, among other things, geothermal working areas tender procedures.

Through MEMR 37/2018, the MEMR clarifies, among other things: (a) steps and procedures for geothermal working area tender; (b) criteria of bidding participants, (c) criteria for determining the winners of successful tenders, and (d) detailed procedures for issuance of Geothermal Licenses (Izin Panas Bumi/IPB).

The document goes into detail on issues for the Geothermal Working Areas Tender

  • Tender Committee,
  • Procedures,
  • Weighting score,
  • Scoring by considering affiliates of the bidder,
  • Foreign entity in the working areas tender,
  • Winning bidder,
  • Bid bonds
  • Limited offer based on the PSPE Results
  • Geothermal Business Assignment

Furthermore it touches upon Geothermal Licensing and other issues related to power purchase agreements.

The lawyers see hope that things are going to move forward on ambitious geothermal development plans for Indonesia, while “further details, in particular with respect to the content of the pre-transaction agreement and the clarity on the electricity tariff determination mechanism will be needed to further boost geothermal development in Indonesia.”

Very helpful document for anyone involved in development in Indonesia.

The full document can be downloaded here (pdf)

Source: UMBRA