New Geothermal Draft Regulation of the Government Sets Out Licensing Simplifications

The Ministry of Energy and Mineral Resources (“ESDM”) is finalizing discussions on the Draft Regulation of the Government (“Draft Regulation”) on the Utilization of Geothermal Energy for Electricity Generation as an amendment to Regulation of the Government No. 7 of 2017 on Geothermal Energy (“Regulation 7/2017”) for Indirect Utilization. Draft Regulation is currently undergoing harmonization by the Ministry of Law.

The Director-General of Renewable Energy and Energy Conservation (“EBTKE”) Eniya Listiani Dewi stated that regulatory updates in the geothermal sector are necessary to streamline the licensing process. “This is the Minister’s directive to streamline geothermal permitting regulations,” said Eniya.

According to a draft document obtained by Hukumonline, the Draft Regulation on the Utilization of Geothermal Energy for Electricity consists of 17 chapters and 173 Articles, namely: the chapter on authority and governance; the chapter on planning, preparation, and assignment of Work Areas (“WK”); a chapter on the bidding process for WK and business licensing; a chapter on the term of operation; a chapter on the utilization of by-products, non-electricity uses, and environmental considerations; a chapter on the obligations of Geothermal Permit (“IPB”) holders; and a chapter on government support.

One of the permit streamlining measures regulated in the Draft Regulation is found in Article 67 and Article 68, which provide that an IPB automatically takes effect as an Electricity Supply Business License (“IUPTL”) upon the signing of an Electricity Purchase and Sale Agreement (“PJBTL”) with a state-owned electricity company. Meanwhile, the IPB is categorized as a risk-based business license, with the authority for its issuance and management centralized under the Central Government/Minister of ESDM.