Indonesia Orders State-Owned Utility to Buy Geothermal Power

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"The decree aims to provide a legal platform for accelerating geothermal development."

Indonesia has ordered state-owned utility PT Perusahaan Listrik Negara to buy power from the country's geothermal plants to support investment in the alternative energy source.

Jakarta-based Listrik Negara is required to buy geothermal power at a maximum of 9.7 U.S. cents per kilowatt hour from new plants, according to a ministerial decree effective on Feb. 16 and obtained by Bloomberg News today.

For power plants built before the ruling, Listrik will buy electricity based on prices agreed by the government and the utility companies when they signed development rights.

"The decree will give a legal platform for accelerating geothermal development and in completing power purchase agreements," Surya Darma, head of the Indonesian Geothermal Association, said by phone from Jakarta today.

Indonesia, Southeast Asia's biggest economy, is encouraging the use of cleaner energy to accelerate electrification in remote areas and meet President Susilo Bambang Yudhoyono's targeted average annual growth rate of 6.6 percent over the remainder of his second term, which ends in July 2014.

A geothermal venture of Chevron Corp.'s Indonesian unit was awarded a permit from the West Lampung regency to explore and develop 320 square kilometers of land on the southern part of Sumatra island, Chevron said Dec. 6.

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