Jakarta. The Indonesian government seeks to allocate Rp 5 trillion ($375 million) from the state budget next year for geothermal exploration, in order to accelerate development of the energy source that has a potential of 28,000 megawatts.

The money accounts for half of the Rp 10 trillion renewable energy budget that the government plans to spend next year, said Sudirman Said, the energy and mineral resources minister. The spending plan is part of the 2016 state budget, which has yet to be approved by the House of Representatives.

Lack of funding has been among the factors that have slowed down development of the power source, Sudirman said. Indonesia has developed only 5 percent of its geothermal potential — slated to be the largest in the world.

“We want to see whether it’s possible to identify the [geothermal] concession holders and give them funds for exploration — let’s say, government gives them a capital injection,” he said.

Abadi Purnama, chairman of the Indonesian Geothermal Association, said however that the government should avoid disbursing the funds as loans as part of an exploration stage.

“Nobody would want that, because it means they have to provide guarantees,” Abadi said. “On the other hand, the project itself cannot become the guarantee, because its final reserve and value cannot be estimated [before exploration].”

Abadi said that the government should instead outsource exploration to state-owned firms such as Geodipa and Pertamina or its geological agency. Private companies could then pay for data that they would need during the production stage, he said.

Investor Daily

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