Indonesia: change to rules and auction of 6 working areas in 2013

Darajat Unit I owned by Indonesia Power (a PLN subsidiary) with steam supplied by Chevron (source: wienblog-growingtree/ blogspot)
Alexander Richter 9 Jan 2013

Indonesia is to hold auction on six geothermal working areas in 2013 under changed regulations on auctions of geothermal working areas that bases decision on company program and commitment.

The government of Indonesia plans to auction off six geothermal working areas in 2013. The auction will take place once a legislative revision on Government Regulation No. 59/ 2007 on Geothermal Business Activities is completed, so the Secretary to the Directory General of New Renewable Energy at the Ministry of Energy and Mineral Resources.

The working areas have a potential power generation capacity of about 400 MW.

The auction will choose winner based on the bidding company’s program and commitment, not like previously on the lowest offering price as in current regulations.

This should help see a more constructive approach that will see capable developers that actually have the means and finances to develop projects in these working areas being auctioned.

Reported previously, the changes with the introduction of a Feed-in-tariff, fixes the electricity price and the winner of an auction can be determined by “respective programs and commitments”.

The legislative changes were expected to be closed before the year end of 2012 and the auctions to be held in March/ April 2013, so an article in October 2012. (an overview on the old regulation can be found here provided by law firm Norton Rose)

Part of the regulation review is also the rule on a bank guarantee by bidders with an option of $10 million (to be enough to fund the drilling of one exploration well and other activities), a time cap on exploration activities for investors for two years, so “that investors remain serious”.

If things go by plan, geothermal energy production based on the new regulation is expected to be operational by 2017 or 2018.

Source: Indonesia Finance Today