Indonesia delays auction of geothermal areas due to ongoing tariff negotiations

Mountains of East Java (source: flickr/ TidalPush, creative commons)
Alexander Richter 14 Apr 2019

As no pre-transaction agreement has been reached with PLN, Indonesia is postponing a scheduled tender of five geothermal working areas to May this year.

The Ministry of Energy and Mineral Resources delayed the auction of five Geothermal Working Areas (WKP). The Directorate General of New and Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources (ESDM) postponed the auction of five Geothermal Working Areas (WKP).

The auction, scheduled for this month will now be pushed to May. Director of Geothermal Directorate General of EBTKE, Ida Nuryatin Finahari, explained that the auction schedule was delayed because it was still awaiting the pre-transaction agreement (PTA) document from PLN. “They are preparing it,” he said to local news outlet KataData, last week.

“They want the price to be higher than what PLN offers. If the tariff is expensive, it does not need to be auctioned, “said PLN Business Director Djoko Rahardjo.

PTA is a WKP auction requirement. PTA is needed because PLN will buy electricity produced by private electricity producers (IPP) who win the WKP auction. In the PTA an electricity tariff scheme will be established. Ida stated that she could not confirm the tariff scheme.

However, before, he said the scheme was a sliding scale. With this scheme, electricity tariffs are dynamic following the amount of production. The tariff rate is determined by PLN.

“So for example the 0-10 MW price is so much, then if production increases to 10-20 MW the price changes,” he said, some time ago.

East Java Regional Business Director, Bali, and Nusa Tenggara PLN Djoko Rahardjo Abumanan explained that it has drafted a PTA draft, however, electricity tariffs are still negotiated with the Ministry of Energy and Mineral Resources. According to him, tariff negotiations are tough. the tariff is expensive, it doesn’t need to be auctioned, “he said. The five WKPs to be auctioned are Laniea in Sulawesi with a capacity of 66 MW, Sembulan in East Nusa Tenggara (NTT) with a capacity of 100 MW, Telaga Ranu in North Maluku with a capacity of 85 MW. Gunung Wilis in East Java with a capacity of 50 MW, and WKP Gunung Galunggung in West Java with a capacity of 10 MW.

Source: KataData