Indonesian government guarantees will affect about 40 projects

As reported this past week, the Indonesian government has revised a guarantee that answered investor concerns about the feasibility of independent power producers' projects in the country.

“The investors have waited, and they have high interest in building geothermal power plants,” Vice President Boediono said on Tuesday at his palace.

On Monday, Finance Minister Agus Martowardojo signed a revised decree as a way to lure investors into establishing power purchasing agreements with state utility company Perusahaan Listrik Negara.

Boediono said the amendment would alleviate investors’ concerns about PLN’s financial ability to meet the power purchase agreements between PLN and private power plant companies.

In the previous ministerial decree, the guarantee was given by the government through the Energy Ministry to PLN. In the revised decree, the guarantee was issued by the finance minister and given directly to private power plant producers.

PLN president director Dahlan Iskan said on Tuesday that in the past many geothermal projects could not be developed because investors asked for a government guarantee. Geothermal production will contribute 4,000 MW, or about 40 percent of the government’s total estimated power production.

There are 40 projects that will be affected by the revised decree.

Geothermal blocks likely to be of interest to investors were Rajabasa (Lampung), Muara Laboh (Aceh), Seulawah (Aceh), Dieng (Central Java) and Flores (East Nusa Tenggara)."

Source: The Jakarta Globe