GOVT RAISES GEOTHERMAL POWER PRICES

By Andi Abdussalam

Jakarta, July 19 (ANTARA) - The government has raised the sales price of electricity produced by geothermal power plants from the previous maximum 9.7 cent dollar per kWh to a range of 10 cent dollar - 17  cent dollar per kWh, in a move congruent with power energy distributors' demands.          Director General for New, Renewable and Conservation Energies Affairs of the Ministry of Energy and Mineral Resources (ESDM) Kardaya Warnika said that the government hoped the increase in the price of geothermal power would increase the use of electricity produced by geothermal power plants and would boost investment in this sector, here on Tuesday.         The director general said that the new price increases were regulated through a ministerial decree which revised the ESDM ministerial decree No. 2 / 2011 on the assignment of state-owned power utility firm PLN to purchase electricity produced by geothermal power plants and on the reference prices of geothermal power the PLN has to pay.          Based on the revised ministerial decree, PLN has the obligation to purchase geothermal power at a maximum price of 9.7 US dollar cents per kWh.          Last month, Pertamina  Geothermal Energy (PGE), a subsidiary of state-owned oil and gas company Pertamina, hoped that the government would soon set a reasonable price on the price of geothermal power.          He said the sales price of geothermal power was still low at Kamojang IV geothermal power plant (PLTP) with its price still at three US dollar cents per kWh. The government could help develop geothermal power production by setting a reasonable price," told President Director of PT PGE Slamet Riadhy.          He said the geothermal power plant industry is a highly risky business and needs a large investment.  PGE hoped that the sales price of electricity from geothermal energy produced at Ulubelu 3 and 4 would be higher than Ulubelu 1 and  2 which will soon start operating as per government guidelines.          Slamet said PT PGE is managing 292 megawatts of geothermal power energy, of which 20 MW is produced by PLTP Lahendong. However, he added PGE has set a target of producing 110 megawatts from the geothermal area in PLTP Ulubelu 1 dan 2 this year.          Director General Kardaya said the newly set prices of geothermal power were set at a variable rate ranging from 10 US dollar cents to 17 US dollar cents per kWh, depending on the locations of the plants and on other specific considerations.          He cited Java as an example where the price of per kWh of geothermal power was set at 11-11.5 cent dollar per kWh in Sumatra at 10 cent dollar, in East Nusa Tenggara at 15 cent dollar and Papua at 17 cent dollar.          The prices were also set based on the availability of geothermal energy sources and their environment supporting capacity in places such as at tourist resorts and places where pollution of the regions was high.          He said that the new prices were not effective for old contracts, but were effective for new contracts or for contracts which were to be extended.  "Yet, old contracts can also implement the price increases based on a business-to-business (B-to-B) deal," he asserted.          The director general said that the price of geothermal energy was also raised as part of the government's efforts to boost investment in the geothermal energy sector.          "The government has set itself a target to increase geothermal production to 4.000-5.000 MW in 2014-2015," revealed Kardaya Warnika.          The Indonesian government is developing a 20,000 MW power project in two phases. Out of the country's second phase of the 10,000 MW development project, 4,000 MW would come from geothermal sources.       For this purpose, besides encouraging local investors, the government is also making efforts to offer the opportunity to foreign investors. Indonesia and New Zealand have agreed on cooperation in geothermal energy research. Indonesia has the largest geothermal reserves in the world, but the country has not been able to make use of its natural wealth yet.          According to Education Minister Muhammad Nuh, New Zealand has high technology and research expertise in geothermal energy. Nuh said that the education ministry has established a rapport with a number of major universities in the country like Bandung Institute of Technology, and Surabaya Institute of Technology to develop geothermal research.          In the meantime, Japan is also looking to increase its cooperation with Indonesia in the field of geothermal energy development as part of its efforts to find energy sources to meet its needs.         "Japan has expressed its commitment to cooperate in the field of geothermal energy development," told Vice-Presidential spokesman Yopie Hidayat while speaking to newsmen recently.          He released a statement after Vice-President Boediono received Hiroshi Okuda, the governor of Japan Bank for International Cooperation (JBIC) and Japanese ambassador Yoshinori Katori.          While noting the similarities in natural conditions of the two countries, it was cited that they could cooperate to develop geothermal and hydro-energy sources.  "Japan has used geothermal and hydro-energy sources to generate electricity. Japan wishes to be involved in the development of the energy resources in Indonesia," he said.          He said Vice-President Boediono welcomed the JBIC's request, saying the Indonesian government is prioritizing the development of environmental-friendly power plant.          Out of the country's second phase of the 10,000 MW development project, 4,000 MW would come from geothermal sources. "It would be very good if JBIC would participate and support it," he said, quoting the Vice-President.***2*** (T.A014/INE/A/E002) 19-07-2012 14:2