Tuesday, June 21, 2016

Indonesia: Cities and Regencies to Share Profits from Geothermal Energy

Regional Govts to Get Share from Geothermal Profits (Tempo)

Local governments in Indonesia will soon be able to enjoy the profits from geothermal activities. The government has entered the final stages of drafting a regulation on the bonus from geothermal production, which is expected to be implemented next month.

"The Energy Minister, Finance Minister, Home Affairs Minister, and the Coordinating Minister for the Economy have all agreed. We now only have to wait for the president's approval," Yunus Saefulhak Director of Geothermal Energy and Mineral Resources, told Tempo Monday, June 20, 2016.

The bonus and profit portions for local governments will be given based on the sales percentage between geothermal developers and the central government. The calculation is based on power units (kilowatt hours/kWh). For thermal power sales and purchase agreements (SAPs), the profit share is 1.0 percent and for electricity SAPs the share is 0.5 percent.

Yunus said areas that are eligible for a share of the revenues are cities and regencies—not provinces. If a work is located in more than two regencies/cities, the production bonus will be divided according to the area size.