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Government/ World Bank $275m geothermal fund to push development in Indonesia

Drill site at Muara Laboh project, West Java/ Indonesia (source: ENGIE)
Alexander Richter Alexander Richter 21 Oct 2017

Indonesia launching $275 million Geothermal Fund to be managed by PT SMI to push geothermal development in the country. Representatives from the Ministry of Energy and Mineral Resources, the Ministry of Finance and PT SMI from Indonesia will be presenting at the upcoming IGC Invest Geothermal event.

Indonesia pushes ahead with its ambitious geothermal development plan, now providing a newly founded geothermal fund of around Rp3.7 trillion (around $275 million).

Director of Geothermal of Directorate General of Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources Yunus Saefulhak disclosed,  geothermal fund prepared by the government amounting to Rp 3 trillion through the State Budget (APBN) this year.

“The government appointed PT Sarana Multi Infrastruktur (SMI) to manage it,” he said in Jakarta this week.

Yunus said the geothermal fund will also get additional funds coming from World Bank grants of US $ 55.25 million or around Rp700 billion. So, if summed will be about Rp3.7 trillion. Exploration will take place in areas of work that are not currently managed by unacceptable contractors.

“So many are interested because the risks are getting minimal,” he said.

Based on the Regulation of the Minister of Finance (PMK) No. 62 / PMK.08 / 2017, funds for the provision of infrastructure of the geothermal sector can be used for lending activities, equity participation and / or providing data and geothermal information. For lending and equity participation activities, PT SMI will implement under a corporate business scheme.Meanwhile, for the provision of data and information on geothermal, PT SMI will perform under special assignment by the Minister of Finance.

Assignment of the provision of data and information on geothermal to PT SMI is implemented as a form of Government’s role to minimize exploration risk to high cost at the exploration stage. Characteristics of high-risk geothermal development have caused general banking tendency to be reluctant to finance the activity. The role of the Government in the exploration phase is expected to reduce the risks for contractors, thus attracting higher participation from developers and banks in financing and developing geothermal into PLTP.

Yunus hopes that this support will encourage the development of the geothermal sector as one of the government’s priority programs in order to provide environmentally friendly electricity and achieve new renewable energy mix target of 23% by 2025.

Yunys Saefulhak of Indonesia’s Ministry of Energy and Mineral Resources, and representatives from PT SMI and Indonesia’s Ministry of Finance will present the fund and the government’s efforts at the upcoming IGC Invest Geothermal – geothermal finance forum in Frankfurt/ Germany 7 November 2017 – learn more here: www.investgeothermal.com/en

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Source: Migas Review