The Ministry of Energy and Natural Resources (Kemen ESDM) has decided to amend the technical regulations concerning Geothermal Working Areas (WKP) because of the decreasing participation in work areas auctions.
Technically, the WKP auctions is regulated under the Minister of Energy and Mineral Resources Regulation (Permen ESDM) No. 37 of 2018 concerning Offering of Geothermal Working Areas, Granting of Geothermal Permits and Assignment of Geothermal Area Management.
Harris Yahya, Director of Geothermal at the Ministry of Energy and Mineral Resources, explained that the amendment was made in relation to reducing the guarantee fund and shortening the auction time. Haris hoped that the amendment can improve the upstream geothermal industry.
“For auction guarantees [deposits], which range from US$ 1 billion to US$ 2 billion depending on capacity, will be changed to only US$ 5,000. This is actually very low for guarantees,” said Yahya, as reported by ekonomi.bisnis.com, on May 11, 2023.
In addition, the Ministry of Energy and Mineral Resources is trying to shorten the duration of the auction, which usually lasts for 5 months to 6 months, to only 1 month. The amended regulation will also mandate every company participating in the WKP auction to have a partnership permit before they can obtain a geothermal permit (IPB).
“This partnership with the SOE is a requirement, currently it is not, but later before the IPB is provided, it is expected that a partnership has been formed and implementation [of the IPB] will be more guaranteed,” said Yahya.
Investors remain optimistic
According to Dadan Kusdiana, Director General of New, Renewable Energy and Energy Conservation (EBTKE), investors’ interest in developing geothermal energy in Indonesia is still quite large.
This optimism has been driven by a number of factors, such as the aggressiveness of the acquisition of working areas by Inpex Geothermal Ltd and Sumitomo Corporation in the past year.
At that time, Inpex took over all of French company Engie’s shares of 31.45% from PT Supreme Energy Rajabasa. This acquisition marks the departure of Engie and is expected to increase exploration performance and investor interest in the domestic geothermal industry.
