TEMPO.CO, Jakarta - The Energy and Mineral Resources Ministry proposes the Finance Ministry to scrap property tax (PBB) for geothermal exploration area to boost geothermal electricity development.
“Geothermal investment is high cost and high risk,” said the Energy Ministry’s geothermal director Yunus on Tuesday.
Exploration has been considered a taxable activity, even though there is no guarantee that investors will find geothermal potential.
Investors also find it difficult to seek loans to boost their businesses because banks know that the economic value of exploration is still low.
New Renewable Energy and Energy Conservation director general Rida Mulyana previously said exploration cost can reach up tp US$10 million per well.
The government has actually provided convenience for geothermal investment by removing value-added tax and import duty for imported goods used in geothermal activities to achieve the high target of 4,600 megawatts in the use of geothermal in power generation system in the next five years.
The Indonesian Geothermal Association appreciated the proposal to remove PBB. Abadi Purnomo, the association’s chairman, said the proposal would contribute in alleviating burdens for investors who are interested in developing national geothermal energy.
Abadi added that another problem in geothermal investment is acquisition. He said people need to be educated comprehensively about environmentally friendly energy.