| Abstract |
In 2003, the Government of Indonesia issued a Geothermal Law No. 27 Year 2003. This new Geothermal Law delegates more authority to local government (District and Provincial Government) in administering and awarding concessions, and supervising the development of geothermal resources in their territory. In accordance with this Geothermal Law, any investor who wishes to acquire a geothermal concession is asked to participate in a tender process. However, after the issuance of the Geothermal Law, there were no new geothermal concessions awarded to investors, until the issuance of Presidential Decree No. 59/2007 that regulates the tender mechanism and procedures in acquiring geothermal concessions. Under this Presidential Decree, a geothermal concession can be announced for a tender after an initial study has been conducted either by the Government or by a private company appointed by the Government. In order to give a positive signal to investors, on May 09, 2008, the Minister of Energy and Mineral Resources issued a Ministerial Decree No. 14 that regulates maximum electricity price generated from geothermal, through the tender. This Ministerial Decree caps the electricity price based on 80% of the electricity production cost in the regional electricity system where the geothermal resource is located. This Ministerial Decree No. 14 presents pros and cons to both electricity buyers and investors. On March 29, 2009, the Minister of Energy and Mineral Resources issued a Ministerial Decree No. 5 to replace the Ministerial Decree No. 14. This paper describes first the pros and cons of basic issues, such as: data accuracy, workability, fairness and risks to investors, related to acquisition of geothermal concessions in accordance to the regulations. Experience as a participant to the first geothermal concessions called for a tender in accordance to the Presidential Decree No. 14, provides unique information in the paper. Secondly, the paper discusses the cap pricing policy of the geothermal power as seen from the investor’s perspective, the Government’s perspective and the off-taker’s or the buyer’s perspective. Thirdly, the paper also discusses other aspects of the tender process that can be improved in order to promote more geothermal energy usage in Indonesia. |