State-owned enterprises in Indonesia encouraged to optimize utilization of geothermal energy

In a written statement received last Friday (April 26), Executive Director of Indonesian Resource Studies (IRESS) Marwan Batubara enjoined state-owned enterprises (BUMN) to further optimize the use of geothermal power. This statement was issued in context of the 38.2% control of state-owned enterprises in the country’s geothermal potential and reserves, far below the ideal conditions set by the 1945 Constitution.

“One of the important aspects of the 1945 Constitution regarding the utilization of Indonesia’s natural resources is about state control, where the management aspects must be in the hands of state-owned enterprises.” said Marwan.

Marwan added that having state-owned enterprises manage the upstream energy sector would guarantee the realization of lower electricity production costs. This will also help the government establish credible baseline costs when dealing with private power producing companies.

It is just as important that the local community benefits from the development of a geothermal project, said Marwan. “The community around the project should not just enjoy the power that will be produced by the facility, but should also receive opportunities to gain economic, socio-cultural, and environmental benefits. These should include improvement of local knowledge.”

Aside from development of the project, power producers should also focus on implementing effective CSR initiatives.

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