Indonesia Plans to Tender Geothermal Areas This Year

INDONESIA: February 26, 2007

JAKARTA - Indonesia plans to tender seven geothermal areas this year to generate around 575 megawatts of electricity, a senior energy ministry official said on Friday.

Indonesia, Asia Pacific's only OPEC member, is tapping alternative sources of energy to meet rising power demand and cut consumption of expensive crude oil as its own reserves dwindle.

Indonesia, dotted with hundreds of active and extinct volcanoes, has the potential to produce an estimated 27,000 MW of electricity from geothermal sources.

However, the vast potential remains largely untapped because the high cost of geothermal energy makes the price of electricity generated this way expensive.

"There are many foreign firms that have shown interest in investing in geothermal areas in Indonesia. Indonesia needs more electricity from geothermal sources to reduce oil use in power generation," Simon Sembiring, director general of geothermal and mineral resources, told reporters.

He said the new areas were mostly on Java island, while one is in Aceh province.

Separately, Mines and Energy Minister Purnomo Yusgiantoro said Indonesia generates 850 MW electricity from geothermal energy and plans to increase that to 9,500 MW in 2025.

Chevron Corp., through its local unit, operates a geothermal plant in West Java province with a capacity of 522 MW and state oil firm Pertamina operates geothermal energy of around 350 MW.

Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN) has a monopoly over power supply in Indonesia and operates 24,000 megawatts of capacity, but most of its plants are ageing, so daily output is far below capacity. Some 30 percent of the plants use oil products such as diesel and fuel oil.

PLN is trying to increase electricity supply to avoid shortages in Indonesia, the world's fourth-most populous country, where power demand is estimated to be growing around 10 percent a year.

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