New Indonesian law to guarantee benefits to local economy

Village Hulaliu, Haruku, Malaku, Indonesia (source: flickr/ Titus Hageman, creative commons)

Francisco Rojas 1 Sep 2014

Following the passing of the long awaited law in Indonesia opening up the possibilities for geothermal expansion, local news detail that there are further changes imbedded in the legislation that aim to guarantee benefits for the local economy and also to simplify and streamline the issuing the exploration rights to investors by centralising them via the national government.

“Rida Mulyana, director general of renewable energy at the Energy and Mineral Resources Ministry, said that local administrations would receive more money from the development of their geothermal resources even if they will no longer decide the issuance of exploration and exploitation rights to investors.”

“The new law will not only regulate the production bonus for new projects, but also for existing geothermal power plants that are already in operation and which already pay tax,” Rida said

This benefit will materialise in the form of a percentage of the revenue the investors receive from the operation of their geothermal power plants to the local administration, dictated by the government. Regarding the specific percentage,  it is still unknown and it will be detailed by the end of the year.

The same source voices the opinion of Abadi Purnomo of the Indonesian Geothermal Association, stating that he welcomed the new plan. However, he said, the bonus should not amount to a burden for the developers. “Around 0.5 percent will be enough,” Abadi said.

It is expected that this change will simplify or even eliminate the complicated licensing procedures at the provincial level, speeding up the development process.

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Source: Jakarta Post Website