Geothermal Investment Opportunities in Indonesia

DIRECTORATE GENERAL OF NEW RENEWABLE ENERGY AND ENERGY CONSERVATION MINISTRY OF ENERGY AND MINERAL RESOURCES Geothermal Investment Opportunities in Indonesia by: Sugiharto Harsoprayitno, M.Sc Director for Geothermal Thursday, July 14, 2011

Geothermal Potency in Indonesia Potential Geothermal Indonesia is the largest in the world, 40% of world reserves, amounting to 29.038 MW, spread over 276 locations Installed Capacity 1,189 MW (4% of whole potency), consists of field: Sibayak 12 MW, Salak Mt. 375 MW, Wayang Windu 227 MW, Kamojang 200 MW, Darajat 255 MW, Dieng 60 MW and Lahendong 60 MW Geothermal Road Map Target 9,500 MW in 2025

GEOTHERMAL POTENTIAL MAP No. Island Number of Loc. Potency (MW) Install Capacity (MW) 1 Sumatera 86 13,516 12 2 Java 71 10,092 1,117 3 Bali 5 296 4 Nusa Tenggara 22 1,471 5 Kalimantan 8 115 6 Sulawesi 55 2,519 60 7 Maluku 26 954 8 Papua 3 75 Total 276 29,038 1,189 Source : Geological Survey, MEMR(2010) Note: Preliminary Survey Ready to Developad Detail Survey Already Developed

INSTALLED GEOTHERMAL POWER PLANT CAPACITY 2010 No. Geothermal Working Area/ Location License Holder Developer Name of Geothermal Power Plant Installed Capacity (MW) 1 Sibayak Sinabung, SUMUT PT. Pertamina Geothermal Energy (PGE) PT. Pertamina Geothermal Energy (PGE) Sibayak 12 2 Cibeureum Parabakti, JABAR PT. Pertamina Geothermal Energy (PGE) KOB - Chevron Geothermal Salak, Ltd (CGS) Salak 375 3 Pangalengan, JABAR PT. Pertamina Geothermal Energy (PGE) KOB - Star Energy Geothermal Wayang Windu, Ltd (SEGWWL) Wayang Windu 227 4 Kamojang Darajat, JABAR PT. Pertamina Geothermal Energy (PGE) PT. Pertamina Geothermal Energy (PGE) Kamojang 200 5 Kamojang Darajat, JABAR PT. Pertamina Geothermal Energy (PGE) KOB - Chevron Geothermal Indonesia, Ltd (CGI) Darajat 255 6 Dataran Tinggi Dieng, JATENG PT. Pertamina Geothermal Energy (PGE) PT. Geo Dipa Energi (GDE) Dieng 60 7 Lahendong Tompaso, SULUT PT. Pertamina Geothermal Energy (PGE) PT. Pertamina Geothermal Energy (PGE) Lahendong 60 1.189 4

I. Law No. 27/2003 on Geothermal REGULATIONS ON GEOTHERMAL ENERGY II. Government Regulation No. 59/2007 jo Government Regulation No. 70/2010 on Geothermal Business Activities III. Government Regulation No. 62/2008 jo No. 1/2007 on Income Tax Facilities IV. Presidential Regulation No. 4/2010 on Assignment to PT. PLN to Accelerate Power Plant Development Using Renewable Energy, Coal and Gas V. Ministerial Regulations MEMR Regulation No. 11/2008 on Mechanism for Determining Geothermal Working Area MEMR Regulation No. 02/2009 on The Guidelines for Geothermal Pre-Survey Assignment MEMR Regulation No. 05/2009 on The Guidelines for Electricity Purchasing Price by PT. PLN from Cooperation and Other Business Entities MEMR Regulation No. 11/2009 on The Guidelines for Geothermal Enterprises MEMR Regulation No. 31/2009 on Purchasing Power by PT. PLN from Power Plant using Small Medium Scale of Renewable Energy MEMR Regulation No. 15/2010 on Projects List of Power Plant Accelerated Development using Renewable Energy, Coal and Gas as well as Related Transmission MEMR Regulation No. 2/2011 on an Assignment to PLN to buy electricity from geothermal power plant

GOVERNMENT POLICIES TO SCALE UP GEOTHERMAL DEVELOPMENT IN INDONESIA 1. Presidential Regulation No. 04/2010 jo Ministerial Regulation No. 15/2010 (2 nd Stage of 10,000 MW Crash Program) in order to speed up the development of geothermal power to the amount of 3,967 MW by the year 2014 which will require a total of US$ 12 Billions. 2. Government provide fiscal incentives for geothermal: Income Tax Facilities (Based on Government Regulation No. 62/2008 jo No. 1/2007) which provide: - 30% (thirty percent) net income tax deduction of the total Investment, for 6 (six) years, 5% (five percent) annually - Income tax charge for dividend paid to Foreign Tax Subject shall be 10% (ten percent), or lower tariff according to effective Double Taxation Avoidance Agreement - Compensation of financial loss for more than 5-10 years Custom Duties Exemption for Importing Items (based on MoF Decree No. 177/PMK.011/2007) Value Added Tax of Import Items Covered by Government (based on MoF Decree No. 22/PMK.011/2011)

GOVERNMENT POLICIES TO SCALE UP GEOTHERMAL DEVELOPMENT IN INDONESIA Continue... 3. Government support in the form of reducing upstream geothermal risk by providing revolving funds (for exploration and FS), particularly for the Eastern parts of Indonesia. 4. The GoI is in process of establishing a State-Owned Company in the geothermal business to support its development. 5. To accelerate geothermal development, the Government offers a Preliminary Survey Assignment to third part (investor) which provides first right refusal. 6. The Government has determined Regulations on Geothermal Price Structure (based on MEMR Regulation No. 02/2011) : Purchase price of electricity by PT PLN from a Geothermal Power Plant, as the result of a GWA tender, is used for the Power Purchase Agreement, the electricity price is final and non negotiable Ceiling price for geothermal energy: US$ 9.7 cents/kwh 7. In order to enhance certainty in geothermal investment, the government has set a Standard Power Purchase Agreement.

Implementation of Geothermal Policies Existing GWA President Decree No 45/1991, No 49/1991, and No 23/1992 Business structure based on JOC and ESC 34% of Net Operating Income (NOI), that had included all kinds of taxes and retribution, except personal tax. Project Management : Under Pertamina (JOC) and PLN (ESC) Project Type: Total (Integrated) Project Partial Project Law No. 27/2003 New GWA Business structure in the form of Permit: Geothermal Mining Permit Enterprise Permit for Electricity Obligation to pay for taxes and royalty Project Management :Under Permit Holder Project Type: Total (Integrated) Project WKP holder will be granted as generally plan operation 8

Development of Geothermal Energy Western Part of Indonesia Big geothermal potential development in mid-big scale project Existing projects as brown fields detail data is unavailable Conducive investment condition is enough attractive to investor (B to B approach) Eastern Part of Indonesia Small geothermal potential development in small scale project Most of the area are green fields detail data is not available Not attractive to investor. Not only need conducive investment condition, but also funding support from government Government support in the form of reducing upstream geothermal risk (GoI allocates budget for exploration and FS) 9

GEOTHERMAL VALUE CHAIN (Current Regulations) Units Potential/ Stadium Geothermal Potential (S-0) Pre-Survey GWA/WKP Determination BUSINESS STADIUM (S-X) GWA/WKP Tendering IUP Issuance Report of Tendering Process (S-1) (S-2) (S-3) (S-4) (S-5) Electricity Price (S-6) Explorat ion (S-7) FS Exploitat ion Production/ Utilization (S-8) (S-9) (S-10) MEMR Potential Map Surve y APBN Rep. Evaluati on WKP WKP-N (S3-N) IUP-N (S4-N) Tender Winner Prov. Gov. Survey APBD Prov. WKP-P IUP-P (S3-P) (S4-P) Tender Winner Pemda Kab./ Kota Corporation Assignment Survey APBD Kab./ Kota Other Parties WKP-K IUP-K (S3-K) (S4-K) Tender Winner The Golden Bridge PLN Assignment PPA

Road Map of Geothermal Development 2006 2025 (based on Presidential Decree No. 5/2006 on National Energy Policy) 2006 2008 2012 2016 2020 2025 852 MW (Produksi) 2000 MW 3442 MW 4600 MW 6000 MW 9500 MW (Target) 1148 MW Existing WKP 1442 MW Existing WKP 1158 MW Existing WKP + New WKP 1400 MW New WKP 3500 MW New WKP 1189 MW Current Condition 5156 MW Plus 2 nd Phase Crash Program Scenario

STRATEGICAL TARGET FOR GEOTHERMAL DEVELOPMENT 2010 S.D 2014 Presidential Regulation No. 04/2010 on Assignment to PT. PLN to Accelerate Power Plant Development Using Renewable Energy, Coal and Gas MEMR Regulation No. 15/2010 on Projects List of Power Plant Accelerated Development using Renewable Energy, Coal and Gas as well as Related Transmission Target for Geothermal Power Plant Development on Crash Program 10.000 MW Phase II - Development for Production on Existing Field : 645 MW - Development for not yet in production on Existing Field : 1535 MW - New Development Geothermal Working Area : 1787 MW Total of Geothermal Development 3967 MW

Geothermal Contribution on 2 nd Phase 10,000 MW Power Development Acceleration Program (Based on Ministerial Decree No. 15/2010 on Projects List of Power Plant Accelerated Development using Renewable Energy, Coal and Gas as well as Related Transmission) Additional Installed Capacity of Geothermal Power Plant up to 2014 is 3,967 MW Existing GWA 2180 MW New GWA 1787 MW Java 1970 MW Outside Java 1997 MW Total investment needed for achieving this target is about 12 Billion USD (with assumption, development cost of 1 MW = 3 Million USD) With developing 3,967 MW Geothermal Power Plant until 2014, could reduce emission about 24 Million ton CO2/Year (6,000 t CO2e/MW/Year)

INVESTMENT OPPORTUNITIES - Development of 3,967 MW electricity from Geothermal in 10,000 MW Crash Program Stage II up to the year 2014 is required more than US$ 12,000 millions for the investment. - Development plan of 12,000 MW Geothermal Power Plant up to the year 2025, international supports are needed. - Foreign ownership in Geothermal Business is allowed up to 95 %; - Business opportunities in geothermal sector: Geothermal direct use; Low temperature geothermal potential; Small scale power plant. Partners and Investors are welcomed to be parts of Indonesia development as the largest geothermal producer.

DIRECTORATE GENERAL OF NEW RENEWABLE ENERGY AND ENERGY CONSERVATION MINISTRY OF ENERGY AND MINERAL RESOURCES Jalan Jenderal Gatot Subroto, Kav. 49 Jakarta 12950 Telp/Faks : 021-5250575 www.ebtke.esdm.go.id www.energiterbarukan.net

Geothermal Power Plant Projects included in Crash Program Phase II NO Geothermal Power Plant Project Status Province Estimation of Capacity (MW) Installed Capacity 2014 (MW) Required Financing 2014 (US$ Million) NO Geothermal Power Plant Project Status Province Estimation of Capacity (MW) Installed Capacity 2014 (MW) Required Financing 2014 (US$ Million) 1 Seulawah Agam New WKP Aceh 1x55 55 165 2 Jaboi New WKP Aceh 1x7 7 21 3 Sarulla 1 Existing WKP North Sumatera 3x110 330 990 4 Sarulla 2 Existing WKP North Sumatera 2x55 110 330 5 Sorik Merapi New WKP North Sumatera 1x55 55 165 6 Muaralaboh New WKP West Sumatera 2x110 220 660 7 Lumut Balai Existing WKP South Sumatera 4x55 220 660 8 Rantau Dadap New WKP South Sumatera 2x110 220 660 9 Sungai Penuh Existing WKP Jambi 2x55 110 330 10 Hululais Existing WKP Bengkulu 2x55 110 330 11 Rajabasa New WKP Lampung 2x110 220 660 12 Ulubelu 3 dan 4 Existing WKP Lampung 2x55 110 330 13 Rawa Dano New WKP Banten 1x110 110 330 14 Kamojang 5 & 6 Existing WKP West Java 1x40 & 1x60 100 300 15 Cibuni Existing WKP West Java 1x10 10 30 16 Cisolok-Cisukarame New WKP West Java 1x50 50 150 17 Darajat Existing WKP West Java 2x55 110 330 18 Karaha Bodas Existing WKP West Java 1x30 & 2x55 140 420 19 Patuha Existing WKP West Java 3x60 180 540 20 Salak Existing WKP West Java 1x40 40 120 21 Tampomas New WKP West Java 1x45 45 135 22 Tangkuban Perahu I New WKP West Java 2x55 110 330 Note : Cost to develop 1 MW = US$ 3 Million 23 Tangkuban Perahu II Existing WKP West Java 2x30 60 180 24 Wayang Windu Existing WKP West Java 2x120 240 720 25 Batu Raden New WKP Central Java 2x110 220 660 26 Dieng Existing WKP Central Java 1x55 & 1x60 115 345 27 Guci New WKP Central Java 1x55 55 165 28 Ungaran New WKP Central Java 1x55 55 165 29 Ijen New WKP East Java 2x55 110 330 30 Iyang Argopuro Existing WKP East Java 1x55 55 165 31 Wilis/Ngebel New WKP East Java 3x55 165 495 32 Lahendong 5 dan 6 Existing WKP North Sulawesi 2x20 40 120 33 Kotamobagu 1 dan 2 Existing WKP North Sulawesi 2x20 40 120 34 Kotamobagu 3 dan 4 Existing WKP North Sulawesi 2x20 40 120 35 Bora Open Area Central Sulawesi 1x5 5 15 36 Merana/Masaingi New WKP Central Sulawesi 2x10 20 60 37 Huu New WKP West Nusa Tenggara 2x10 20 60 38 Sembalun Open Area West Nusa Tenggara 2x10 20 60 39 Atadei New WKP East Nusa Tenggara 2x2,5 5 15 40 Sukoria New WKP East Nusa Tenggara 2x2,5 5 15 41 Tulehu Existing WKP Maluku 2x10 20 60 42 Jailolo New WKP North Maluku 2x5 10 30 43 Songa Wyaua New WKP North Maluku 1x5 5 15 Total Development of Geothermal Power Plant until 2014 3967 11.901

No. GWA IUP Holder Field Developer GWA before Law No. 27/2003 Potency (MW) Installed (MW) 1 Sibayak-Sinabung PT. PGE Sibayak PT. PGE 124 12 2 Cibeureum -Parabakti (Gn. Salak) PT. PGE Gn. Salak CGS, Ltd 952 375 3 Pengalengan PT. PGE 4 Kamojang-Darajat PT. PGE Wayang Windu Star Energy Geothermal Wayang Windu 400 227 Patuha PT. Geo Dipa Energi 706 - Kamojang PT. PGE 855 200 Darajat CGI, Ltd 610 255 5 Dieng PT. PGE Dieng PT. Geo Dipa Energi 780 60 6 Lahendong-Tompaso PT. PGE Lahendong PT. PGE 358 60 7 Sibual-Buali PT. PGE Sarulla SOL 1146-8 Hululais - Tambang Sawah PT. PGE Hulu Lais PT. PGE 873-9 Lumut Balai PT. PGE Lumut Balai PT. PGE 1066-10 Sungaipenuh PT. PGE Sungai Penuh PT. PGE 208-11 Ulubelu PT. PGE Ulubelu PT. PGE 556-12 Karaha-Cakrabuana PT. PGE Karaha Bodas PT. PGE 725-13 Buyan Bratan (Bedugul) PT. PGE Bedugul Bali Energy, Ltd 276-14 Ulumbu PT. PLN (Persero) Ulumbu PT. PLN (Persero) 199-15 Tulehu PT. PLN (Persero) Tulehu PT. PLN (Persero) 100-16 Cibuni KJK Teknosa Cibuni KJK Teknosa 140-17 Iyang-Argopuro PT. PGE Iyang Argopuro PT. PGE 295-18 Kotamobagu PT. PGE Kotamobagu PT. PGE 410-19 Ciater PT. Wahana Sembada Sakti Ciater PT. Wahana Sembada Sakti 90 - Total 10,869 1,189

New GWAs Offered Through Tender Process (after Law No. 27/2003 on Geothermal) As Total Project Scenario, IPP Scheme As of 10 July 2011 NO FIELD REGENCY PROVINCE DEVELOP MENT TARGETS (MW) STATUS OF TENDER PROCESS 1 Seulawah agam Aceh Besar Nangroe Aceh Darusallam 160 On Going 2 Jailolo West Halmahera North Maluku 75 Finished 3 T elaga Ngebel Ponorogo and Madiun East Java 120 Finished 4 Ungaran Mt. Semarang and Kendal Central Java 100 Finished 5 T ampomas Mt. Sumedang and Subang West Java 50 Finished 6 Cisolok Cisukarame Sukabumi West Java 45 Finished 7 Tangkuban Perahu Mt. Subang, Bandung and purwakarta West Java 100 Finished 8 Jaboi Sabang Nangroe Aceh Darusallam 50 Finished 9 Sokoria Ende East Nusa Tenggara 30 Finished 10 T alang Mt. Solok West Sumatera 36 Preparation 11 Blawan Ijen Bondowoso, Banyuwangi and Situbondo East Java 270 Finished 12 Hu'u Daha Dompu West Nusa Tenggara 65 Finished 13 Sipaholon Ria-ria Noth Tapanuli North Sumatera 75 Re-Tender 14 Bukit Kili Solok West Sumatera 83 Re-Tender 15 Sorik Marapi Roburan Mandailing Natal North Sumatera 200 Finished 16 Marana Donggala Central Sulawesi 36 Re-Tender 17 Songa Wayaua South Halmahera North Maluku 140 Preparation 18 Atadei Lembata East Nusa Tenggara 40 Finished 19 Suwawa Bone Bolanga and Gorontalo Gorontalo 110 Re-Tender 20 Kaldera Danau Banten Serang and Pandeglang Banten 115 Finished 21 Rajabasa Mt. South Lampung Lampung 91 Finished 22 Liki Pinangawan Muara Laboh, Solok Selatan West Sumatera 400 Finished 23 Suoh-Sekincau West Lampung Lampung 230 Finished 24 Rantau Dadap Muara Enim, Lahat dan Pagar Alam South Sumatera 106 Finished 25 Guci T egal, Brebes and Pemalang Central Java 79 Finished 26 Baturaden Tegal, Brebes, Pemalang, Banyumas and Purbaling Central Java 175 Finished TOTAL 2981

GWA Determination Plan - 2011 NO Area Province Potency (MWe) Required Financing (US$ Million) 1 Bonjol * West Sumatera 200 600 2 Danau Ranau * South Sumatera 210 630 3 Mataloko * East Nusa Tenggara 63 189 4 Ciremei * West Java 150 450 5 Gn. Endut * Banten 80 240 6 Sembalun West Nusa Tenggara 120 360 7 Wai Ratai Lampung 194 582 8 Simbolon Samosir North Sumatera 225 675 9 Telomoyo Central Java TOTAL 92 276 4,002 *) : determined April 21, 2010

Areas offered for Pre-Survey Assignment (Announcement of Director General of New Renewable Energy and Energy Conservation No. 104Pm/30/DJE/2011) No. Location Regency Province 1. Sungai Betung Kerinci and Pesisir Selatan Jambi and West Sumatera 2. Sungai Tenang Merangin Jambi 3. Ciseeng Bogor and Lebak West Java and Banten 4. Malawa Maros, Pangkajene Kepulauan, Bone and Barru South Sulawesi 5. Gn. Dua Saudara Bitung North Sulawesi 6. Ulumbu Manggarai NTT 7. Gn. Gede/Pangrango Bogor, Sukabumi, and Cianjur West Java

REGULATOR Local Government FLOW OF GEOTHERMAL BUSINES PROSES MEMRE Preliminary Survey Related Agencies Power Purchaser (PLN) GWA Auction GWA Winner Selling Price*) Who has the Sender?? Recommendation Selling price approval BUSINESS ENTITY IUP Holder 2 1 Selling price agreement*) Local gov. Permit Buyer Candidate In Forrest? no yes Forestry Permit EXPLORATION In Forrest? no yes Forestry Permit EXPLOITATION Note: In Forest Area *) main constraint STEAM/ ELECTRICITY EBTKE- KESDM - 2011 2010