New law in Indonesia may open doors for geothermal expansion.
Jakarta, Indonesia (source: flickr/ yohanes budiyanto, creative commons)
Francisco Rojas
22 Oct 2013
New Law is aimed at simplifying current legal frameworks and opening new areas for geothermal exploitation and exploration.
A new law is under way in the House of Representatives of Indonesia that is aimed at making the investment in the geothermal sector more attractive to companies. This law has emanated from the Government itself with the aim of tapping into the country’s vast geothermal resources.
Even though there is huge potential for geothermal development, investors encounter difficulties when working with the current legal framework. According to the press release, “geothermal activities are lawfully defined as ‘mining activities’ (Law No. 27 2003), which implies that it is prohibited to be conducted in protected forest and conservation areas (Law No. 41 1999), even though geothermal mining activities have a small impact on the environment (compared to other mining activities)”.
Considering the substantial benefits of geothermal energy production the Government is scheduled to meet in April 2014 when a change in the current legal framework will be addressed. Alongside this, another point to be discussed is the future obligation of geothermal concession holders to “sell a 10 percent interest to regionally owned enterprises or state-owned enterprises after it enters the exploitation stage.” in order to involve and benefit local entities in the projects.
Source: Indonesia-Investments Website
