Ongoing discussions on formation of geothermal holding in Indonesia

View over Jakarta, Indonesia (source: flickr/ Nick Gray, creative commons)

The Indonesian Ministry of State-Owned Enterprises (BUMN) is forming a state-owned geothermal holding company by combining three state owned entities/ subsidiaries of state-owned entities in the geothermal sector, including PT Pertamina Geothermal Energy (PGE), PT PLN Gas & Geothermal , and PT Geo Dipa Energi (Persero), we have been reporting.

How far the progress of the formation of this geothermal holding has come was reported by CNBC in Indonesia.

Head of the Legal Department of the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources (ESDM) Linda Agustina said that currently discussions were still being carried out on regulations, asset management, and the impact of the formation of this Geothermal BUMN Holding.

“So, this Holding plan is still a subject to discussions that need to be explored, both from regulation, upstream or downstream asset management, what the impact will be, etc.,” he explained in an online discussion on energy, last week.

From a financial perspective there are still discussions left, so his statement. Discussions are continuing between the Ministry of state-owned entities and the Ministry of Energy and Mineral Resources through the Directorate General of EBTKE.

“It’s still something that the Ministry of Energy and Mineral Resources and the Ministry of SOEs continue to discuss until now,” he continued.

Based on Government Regulation No. 7 of 2017 which is a derivative of the Geothermal Law No. 21 of 2014, it is stated that there should be no transfer of Geothermal Working Areas (WKP) to other parties.

Therefore, according to him, according to the rules, there is a prohibition on the transfer of the geothermal permit, but the transfer of shares is allowed.

“It needs to be separated first, what changes first. There are two different arrangements, there is a prohibition on the transfer of geothermal permits, but is it permissible to transfer shares? Yes, of course you can,” he explained.

According to him, based on the Limited Liability Company Law, share transfers, acquisitions, and inbreng (in-kind capital contribution) are also allowed.

“But the permits (geothermal permits) that are prohibited from being transferred to other parties are generally the same,” he explained.

Previously, Harris, Director of Geothermal at the Directorate General of New, Renewable Energy and Energy Conservation (EBTKE) of the Ministry of Energy and Mineral Resources, said the establishment of this Geothermal BUMN Holding needed to follow current regulations, such as Law No. 21 of 2014 concerning Geothermal and Government Regulations. (PP) No. 7 of 2017 concerning Geothermal for Indirect Utilization.

He also highlighted the rules regarding the non-transfer of Geothermal Working Areas (WKP) to other parties. According to him, the government will see the consequences for the formation of this Holding.

“The Ministry of Energy and Mineral Resources, in this case, of course needs to look at this consolidation plan with existing regulations. There is a 2014 geothermal law, there is PP 7 2017 which must be seen by all, because it regulates arrangements, for example, there should be no transfer of WKP to other parties, what are the consequences? in this consolidation,” he explained.

However, according to him, as a whole, his party supports the government’s efforts to form a Geothermal Holding. Harris said the government made improvements to regulations and incentives to make investment in the geothermal sector more attractive.

“We are still trying to improve regulations, improve incentives, and always create so that we can encourage and attract investment in geothermal energy,” he said.

Source: CNBC Indonesia