Indonesia to expand direct appointments for geothermal concessions

The Indonesian government will expand use of the direct appointment mechanism to award geothermal concessions.

Under the current system, the government can directly appoint a company to expand an existing geothermal concession. Energy Minister Jero Wacik said that under the new regulation, such direct appointment could also be used for new concessions.

With the direct appointment, the state utility firm Perusahaan Listrik Negara will have to automatically buy the electricity produced by the concession holder without the need to renegotiate, one factor that has been singled out as a hindrance to the development of geothermal energy.

“This negotiation can become one of the hindrances in the acceleration of the development of geothermal energy,” Wacik said. “As long as there is no pricing agreement, the two sides cannot sign a power purchase agreement.”

“We are currently preparing the government regulation that will govern the development of new geothermal concessions without having to go through tenders and use a direct appointment,” Wacik said.

He said with the new regulation, the direct appointment system could be used as long as the company involved had already developed other geothermal concessions or had prior experience in the industry.

He said the move is expected to help accelerate the development of geothermal energy and reduce dependency on fossil fuels for power generation.

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