Government Determines Production Bonus Amounts for Geothermal Businesses

The Government has issued Government Regulation No. 28 of 2016 on Amounts and Procedures for the Deposit of Geothermal Production Bonuses(“2016 Regulation”), which implements Article 53 (2) and Article 83 of Law No. 21 of 2014 on Geothermal Energy (“Geothermal Law”). [1] The abovementioned articles, in brief, mandate further provisions relating to the production bonuses which are payable by parties involved in the geothermal business to the regional government where the business is located. This new provision encompasses: production-bonus tariffs, bonuses payable to regional government, procedures for the depositing and reporting of any bonuses, as well as reimbursements made to geothermal businesses by central government.The 2016 Regulation is of relevance to businesses which are currently involved in, or which are intending to become involved in geothermal-mining business activities.Obligation to Pay Production BonusesThe Geothermal Law mandates that all businesses which are involved in geothermal activity (including holders of geothermal-business licenses, holders of geothermal-utilization authorizations, holders of geothermal joint-utilization contracts, and holders of geothermal-utilization licenses – collectively referred to as“Geothermal Business”), should pay production bonuses to the relevant regional government. [2] Geothermal Businesses must begin paying production bonuses from the time that they enter into the commercial-production stage. In cases where a Geothermal Business entered into the commercial production stage prior the Geothermal Law coming into force (17 September 2014), then the payment of production bonuses has been mandatory since 1 January 2015. [3] Production-Bonus TariffsThe relevant production-bonus tariffs have been set at: [4]