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Indonesian government plans to financially support stalled projects

View towards Mount Salak, West Java, Indonesia (source: flickr/ Cak-cak, creative commons)
Alexander Richter 20 Mar 2013

The Indonesian government is planning to tap into a Geothermal Fund scheme to provide soft loans of up to $30 million per project to projects that are stalled due to cash flow problems.

News from Indonesia report, that the Indonesian government is planning to support stalled geothermal projects through a cash injection.

This follows statements by a high-ranking Energy and Mineral Resources Ministry official.

Indonesian geothermal development has not moved forward as expected due to several difficulties, e.g. on obtaining permits, securing of financing etc., so there is hope that through the new plan things will move forward.

There are today about 60 approved geothermal projects in Indonesia, with only 9 of them being actively developed further at the moment. Permitting seems to be the predominant issue, while only about 10 percent of projects are hold back due to the lack of funding.

Through the planned “Geothermal Fund”-scheme the government plans to provide soft loans to help projects that have a cash problem..
The Energy and Mineral Resources Ministry will liase with the Ministry of Finance on details of the scheme. “We will screen projects first to assess which developers are really experiencing financial difficulty and which are just trying to secure easy money,” so the government official.

The Indonesia Geothermal Association expects the loans to cover as much as $30 million per project. While the fund has been created previously, it initially was only to provide funding to local government geothermal projects. The problem of cash striven developers is seen as the result of the competitive bidding process for acquiring licenses, that did not require the bidders to have funding available.

So it seems like with the new scheme and funding available, another obstacle for moving development in Indonesia forward.

There still remain though voices that warn of not comprehensive renewable energy policy in Indonesia that could create further problems down the road for the country.

Source: Jakarta Globe