Government earmarks Rp700b for geothermal power in West Java, Central Java. The government is set to inject Rp700 billion (US$49.83 million) into state-owned geothermal company Geo Dipa Energi next year to increase the company’s production capacity and support renewable energy projects.
Geo Dipa said in a statement that the state capital injection (PMN) from the Finance Ministry would be used to develop a 55 megawatt (MW) geothermal power plant in Patuha, West Java province, and another 55 MW plant in Dieng, Central Java. The plants are expected to be operational by 2023.
Geo Dipa president director Riki Firmandha Ibrahim told reporters in Jakarta on Wednesday that the company was focusing this year on procuring equipment and inking contracts.
“Next year, we will begin drilling and constructing the plants jointly financed by the multilateral lender ADB,” he added.
The Asian Development Bank (ADB) loans would finance up to 70 percent of the two plants, whose combined price tag is $370 million, while Geo Dipa finances the remaining 30 percent, according to the statement.
The two plants currently have an installed capacity of 110 MW but Geo Dipa expects them to reach 270 MW by 2023.
Indonesia, which had an installed geothermal capacity of 1,948 MW last year, aims to almost quadruple its capacity to 7,200 MW by 2025, as stipulated in the Road Map for Geothermal Development 2019-2030.
With the additional government funding, Geo Dipa’s total equity will be worth Rp1.3 trillion next year. The remaining Rp 607 billion comes from undisbursed government funds in 2015.
“In the next 10 years, Geo Dipa will focus on developing the Dieng and Patuha plants to produce 800MW with a total investment value of Rp25.6 trillion,” said Riki.
The Finance Ministry’s director general for state assets Isa Rachmatarwata said the fresh funds would also strengthen Geo Dipa’s role as operator of the “government drilling” program, which is jointly conducted by his ministry and the Energy and Mineral Resources (ESDM) Ministry.
The program, launched early last year, also mobilizes state infrastructure financing company Sarana Multi Infrastruktur (SMI) and state guarantee agency Penjaminan Infrastruktur Indonesia (PII) to find and drill geothermal wells in East Nusa Tenggara and North Maluku provinces.
“The private sector is welcome to explore too. But the fact is that few want to. It can be said that no investors want to explore [geothermal wells],” he said.
When contacted separately, Indonesian Geothermal Association (API) chairman Prijandaru Effendi said that geothermal exploration was generally costlier than oil and gas exploration due to geographical constraints.
“Many geothermal projects are located in isolated areas without infrastructure,” he told The Jakarta Post, “And while one can choose where to build coal-fired power plants, [geothermal plants] have to be near mountains. We can’t stay away from them.”
Energy analyst Abadi Poernomo added that a potential drawback of state-owned enterprises’ heavy involvement in the domestic geothermal energy industry was a crowding out of private players.
Geo Dipa is not the only state enterprise playing in the local geothermal industry. State utility company PLN and state energy company Pertamina operated 42 percent of Indonesia’s total installed electricity capacity last year, according to ESDM records.
“It becomes an issue when low interest loans are only given to the government instead of private companies. Hence, state-owned enterprises, including their subsidiaries, receive these low interest loans – around 2 percent – while commercial loans are higher,” he said. Government earmarks Rp 700b for geothermal power in West Java, Central Java (Norman Harsono, The Jakarta Post)