Government Regulation No. 59/2007 concerning Geothermal Business Activity

Article 2 the Minister. phase~ df Geothermal business activities consist of: ArtJtfe6 8. PmllJtlinaty SUJ'VeY; (J}'lbe ~ ,,6r1tftIeto assign the other -patty to b. Stipulatioh of WCirk Area and Bid Of WDrkArea; "morm a pl'tllmlne!'V survey. c. exploratioN; (2) The governor, regenttmayoror:the other party may d.feaSibility studY; propose to the Mlni!iter for a Preliminary SUrvey as- e. I:;xploltatlon; signment on an area. (3) Theassigf'tmerit of aPrelli'nin8tySltvey:bythe Minis- f. UtIlization. ter referred to In ~lJb.<IrtideC1Jand:the PreIlmJnary Survey propaaeal bV-thctgovernoror regent/rnayOt ~ ferred to in subo-article (2) can be performed through ~artone bidding. Prelillllntu'Y Survey (4) The performance oft:he' Pt'ellmlnalySl.ttVey assignment At'tlcIe 3 Jt!fe'n~ to in Wb-erlkJe:{3' J5 exercISed by the Minis- (1)TheMinister; gt1Vemort and/or tEgeht/mayor InaCOJr- te"by means of: dance with his authoritY perfol1h Prelimiliary Sutvey. a. Announcementinprintlid: media,eIemorlic madia; (2) The Preliminary SUN9y liift!rted to in sub-artide (1) arJd otner mecUI; iil'\dlor shall be pertbrined through coordination by the Minis- b. Promotion through·\WiOtIS forums, either national ter, QCM!rtiOr, and/or teger1t/mayor inaccordance with or international. hi", Authority. (5) The assignment of a Preliminary Survey by the other party referred to insub-article (1), sub-article {~) and sub-artide (3) is perfonned oottle expense of the other Artide4 party. (1 ) Dab! rnflection of t:f1@ ,gUIt of the- Preliminary Survey (6) For the purpose or a Prelim mary Survey assignment, referred to In Attrde$ shall be recorded and compiled the Minister is entitled to stipulate the base price of for each area compteted with borders, coordinates, vapor or Of electricity from Geothennal power electric ahd width nf tfIp arm with thP fnIlnwing arrangemenh;~ generators. Business Ne¥.\s 7649-7650/4-16-2008 Article 7....

Article 7 c. Paying due observance on the specification and (1) The Prefiminary Survey assignment referred to in Ar- aspiration of the area. tide 6 shall be submitted to the Minister with copies to (4) In the preparation and stipulation of the Work Area the local governor, regent/mayor by attaching the map referred to in sub-artide (2), the Minister shall consult of the requested area. with related agencies, provincial Government, and re- (2) The Preliminary Survey assignment referred to in sub- gency/ munidpality concerned. article (1) is performed by implementing a system (5) Furtherprovisions on the procedure for the stipulation wherethe first application meeting requirements, re- ceives first priority to get the Preliminary SUivey as- of the WorkArea referred to in sub-article (2) is regu- signment (first come first serve). latedin the Ministerial Regulation.

Article 8 Article 12 The other party performing the Preliminary Sur- (1) The Government stipulates the base price of data of vey assignment referred to in Article 6 and 7 must: the results of the Preliminary Survey and/or Explora- a. keep and secure data of the result of the Preliminary tion referred to in Artide 11 sub-article (2) performed Survey until the end or the i:lssiymnent; and by the governoror regent/mayor. b. keep confidential data acquired and submit all data to (2) The Minister stipulatEs the amount of compensation of the Minister after the end of the assignment. the data of the result of the Preliminary Survey As- signment (awarded compensation) based on the re-

Article 9 The other party performing a Preliminary SUrvey portof the performance and of the financial report of assignment referred to in Article 6 and 7 does not receive the other party. a WorkAreaautomatically. (3) Price of the Work Area data referred to in sub-artide (1) and compensation of the data referred to in sub-

Article 10 article(2) is made as reference by the Work Area Bid Further provisions on the procedure of Prelimi- Committee. nary SUrvey assignments referred to in Artides 6 through (4).further provisions on the procedure for the stipulation 9 are regulated in the Ministerial Regulation. of the amount of compensation of the data of the re- sult of the Preliminary Survey Assignment (awarded PartTwo compensation) referred to in sub-article (2) is regu- Stipulation of Work Area lated in the Ministerial Regulation.

Article 11 (1) ActMtieson the exploitation of Geothermal Resources areconducted ir ZI Work Area. Part Three (2) The Minister plans, prepares and stlpulatesthe Work Exploration Area based on a study and processing of data of a Article 13 Preliminary Survey and/or Exploration. (1) The Minister is entitled to perform Exploration within (3) Planning of the WorkArea referred to in sub-artide(2) the Jurisdiction Area of Indonesia Geothennal Mining. shall be performed with the followingcondition: (2) The performance of the Exploration referred to in sub- a. Transparent, partidpative and with full responsibil- article(1) shall be made coordinated with the gover- ity; nor or regent/mayormncerned. b. Integrated, by paying due observance on the na- (3) Further provisions on Exploration referred to in sub- tional interest, relatedsectorand the community, article (1) and sub-article (2) is regulated in the Minis- and shall consider the aspects of economy, ecol- terialRegulation. ogy, sodo-unture, endthe environment; 000 Business News 76119~ 7650/4-16-2008 Artide 14..... 21A

Article 14 Part Five (1) A business enterprise mayperform an exploration in a Exploitation Work Area aftar receiving an IUP. Artide 16 (2) Business enterprises are obliged to perform Explora- 1) IUP Holders mayperform Exploitation after the comple- tion in accordance with good and proper mining tech- tion ofthe Feasibility Study and had received a ded- nique norms and Geothermal Exploration standard until sion on the feasibility of the environment based on re- the Geothermal proven reserve potentials has been sults of analysis studyon environmental impacts or an uncovered as basis for the issuance of a development approval of environmental management efforts and en- cornmibnent. vIronmental monrronng etrorts Inaccoraance With pro- visions of legislations in the field of the living environ- PartFour ment. Feasibility Study (2) BU5ine--...s enterprises are obliged to perform Exploita~

Article 15 tlonin accordance with good and proper mining tech- (1) IUP Holders may perform Feasibility Studies aftercom- nique norms and Geothermal Exploitation standard and pleting an e)(ploration and had sllhmittPd <=I r1Ph:liIPd shall observe environmental aspects and the conser- Exploration Report to the Minister, governor or regent! vation of Geothermal Resources. mayor in accordance with its authority. (J) Tn the €'VE'nt tnE" FyPlor.;ltion is p"'rformed by thE:> Minis- PartSix ter, a business enterprise mayperform the Feasibility Utilization Study directly after being awarded an IUP. Artide 17 (3) Business enterprises are obliged to perform !=Pac;ibility IUP Holders may perfOrm the following activities: Studies in accordance with good and proper mining a. Indirect Utilization for electric powerafter obtatning technique norms and Geothennal FeasibRity Study stan- permiton electricity business in accordance with pro- dard. visiol15 of legislations in the fidd of electricity i and/or (4) TheFeasibility Study referred to in sub-article (2) cov- b. Direct utilization where the performance there-of is ersstudies on: regulated in a separate Govemment Regulation. ;L ~prmin::ltinnof minina feasible ~l'VP in thP whole Work Area; Articde18 b. Implementation of a correct technology for Exploita- Guidance on the stipulation of Geothennal vapor tion <=Inrt for cal1h1rina vapors frnm pmi'h moo WE'IIc;; price for electJicity generator isregulated in the Ministerial c. Location of production wells; Regulation. d. Design of production wells andinjection wells; f':. DP_c;ign of production well piping<;

Article 19 To ensure the availabiUty of electricity for the in- f. Plan on shortterm andlong term production capac- terest of the public, the Government mayassign a Proxy of ity; electricity business to buy vaporor electricity originating g. Flfrtric power a€'l'lE.'ratorsystem <=Inrl/nr r1irPrt utili- rrom Geothermal Inaccordance with legiSlatiOn proviSIOns. zation system; h. Conservation efforts and continuity of Geothermal a-tAPTERlli Ree:nIIrrPC; ; BIDOF WORKAREA i. Plan on work safety and health, environment pro- Part One tection, and Geothermal mining techniques; and General j. Temporary post-mining plan. Article 20 Business News 7649~ 7650/4~ 16-2008 (1) In••. 22A (1) In the oontext of bidding for a WorkArea. the Minister b. Inter-Regency/Municipality Work Area Bid Com- is entitled to stipulate the base price of vapor and/or mittee, established by the governor concerned 0011- electridty fromGeothennal electric power generators. sisting of representatives of the service responsible (2) TheMinister, governor or regent/mayor in accordance in the field of energy and mineral resources, the wrth his authority transparently announces the Work service ooncemed, provincial government, Regency/ Area referred to In Artide 11 for tender to business Munidpafily yovetnulI::l1l, anrllddted regiOnal g;.JV- enterprises. ernment agencies; (3) TheMinister, governor or regent/mayor in.ao:ordance c. WorkArea Bid Committee within the area of au- thority of a RegenCYIMunicipality is establ~ by with his authority performs the bidding of the Work the regent/mayor concerned consisting of repre- Area referred to in sub-artlde (1) to business enter- sentatives of the service responsible in the field of prises by using a bid method. energy and mineral resources, the.agency con- (4) In performing the bidding on the WorkArea referred to cerned, JJ'<MndaI goverrment, regeocytmunicipality in sub-arode (1), the Minister, governor or regent/ government, ancl related regional goverrment agen.- mayor in aceordence with his authority has the duty cles; to: a. Form a WorkArea Bid Committee whose members Part TWO oonsist of odd numbers of at least 5 (five) persons, Bid Requirements and Procedure knowledgeable on Work Arefli Bid procedure, sub- AItlCIe21 stanceof Ge£lthermal Exploit:atiOn induding its utili- "The WorkArea Bid Committee prepares bid docu- zation. legal and otherrequired aspects from wittlin ments referred to inArticle 20 sub-articIe (5) letter b oov- or outside of the ageney concerned; and cring: b. To stipulate andlegaltze the result of the WorkArea a. Administrative, technical. and financial requirements; bidding. b. Methods on the submission of bidding documents; (5) ~, authority anrlnhl~~~ WorkArea Bid c. M@lhods of bid evaluation; and Committee referred to in sub-artide (4} letter a cover: d. Procedure for the determination of a bid Winner. a. to mmpi1e ttle 5Chedule andto determine the 1oca- tion dtheWorkArea bkf: Artide 22 b. to prepare BidDocuments; (1) BusineSS enterpr1ses entit1ed to partiCipate in a bid for c. to announce thebfdctfng of a WorkAreaj a WorkArea must meet the administrative, technical, d. to evaluate the quafification of business enter- andfinandal requirements referred 10 in Article 21sub- prises throug~ pre-quallffcation; article ( 1) tetter a. e. to make evaluations on bids received; (2) The administrative requirements referred to in sub- f. to propose prospective winners;and article (1) should rover at least: ;:I. IUP oppUcation letter to the Minister, governor or g. to makea report on the bidding of the Work Area. regertJmayor in ~wtth his autOOrfty; b. Identity at applicant/ company deed of establish- (6) TIle Work Area Bid Committee referred to insub-ar- nvont; tide (4) letter a consists of: c. Company profile; a. Inter· Province WorkArea BidCommittee, estab- d. Taxpayer Basic Number; and lished t11 the Minister consists of representattves d. e. statement letter on ability to paydata oompensa- the service responsible in the field of energy aM non, except for the other party awarded Prelimi- mineral resources, the agency ooncerned, provin- nary SUNey Assignment. cial government, and the. local regency/municipal- (3) The technical requirements referred to in sub-article itY government; (1) should rover at least; Business NevA 7649~7650/4-16-2008 a.GxpIoration ... 23A a. Exploration or Feasibility Study Technical Plan;and (2) The bid evaluation referred to in Artide 21 letterc shall b. Exploration or Feasibility StudySChedule Plan. be madebased on evaluations of technical quality, fi- (4) The financial requirements referred to in sub-article nanelal and the lowest price of vapor or electricity (l) should cover at least: among bid plices. a. Funding ability; and (3) Procedure for the determination of the winner of a b. Proof of placement of bid guaranty in a minimum of WorkArea Bidshallusethe method referred to in Ar- tide 211etterid covering: 2.5%of the first year Exploration cost plan, from a a. Phase One.: local bankin the nameof the WorkArea Bid Com- 1. Pre-qualification announcement; mitteP_ Z. collecting prt:-qudlirlCdtion documents; (5) The bid guaranty referred to in sub-article (4) letter b 3. returning pre-qualification documents; will be returned to business enterprises losers. 4. pre-qualifil:ation evaluation; ;. clarification and confirmatiOn on pre-qualifica-

Article 23 tion documents; (1) Method for the submission of bid documents referred 6. stipulation ofpre-qualifrcation result; to in Artide 211etterb is performed in two phases, 7. announcement of pre-qualification result; namely: 8. pre-qualiflCaOOn objection period a. Phase One, covering: b. Phase Two : 1. Business enterprises submitadministrative, tech- 1. Invitation to successful pre-qualification partiei- pan~; nical,and financial requirements in one enve- 2. collecting Bid Documents~ lope; 3. clarification; 2. Address of theWork Area Bid COmmittee per- 4. compilation of reporton BidDocument clarifica- forming the WorkArea Bid should be written on tion and fts changes; the envelope, with the phrase Phase OneWork 5. submission of the priceof vaporor electridty; Area Bid Document; and 6. opening of bid envelopesj 3. Onthe outer envelope of the bid aocument, the 7. stipulation of rating; date andtime of receiptshould be noted by the 8. notification/announcement of winner; Work Area Bid Committee. Bid documents re- g. objection period; celve{j after the Submission ume limit t:ICl~c::df 10. clarifICation on objections; and are rejected. 11. appointment of winner. b. Phase Two, covering: (4) Furtherprovisions on the perfonnance of bid evalua- tion referred to in sub-article (2) shalf be regulated in 1. Bu5int:Sjenterprises partidpating in 0 Work Area the Ministerial Regulation. Bid, declared by the WorkArea BidCOmmittee as having slfcceeded Phase One evatuation, should insert. the price of vapor or e\ectrk: power Part Three in the envelope; Bidon WorkArea as a Resultof Preliminary Survey 2. The value of bid price of vapor or electricity should Assignment be written clearly in numerals and alphabets; Article '4 3. Bid documents are confidential in nature and (1) The Minister, based on data of the Preliminary Survey shall be sent only to the stipulated addressee: assignment performed by the other party, stipulates anrl the work Area. 4. on the outer envelope of received bid documents, (2) The Minister, govemoror regent/mayor in acmrdance with his authority transparently announces the Work the dateandtime of receipt should be noted by Area referred to in sub-artide (1) to be tendered to the WorkArea Bid Committee busmess enterprises. Business News 7649-7650{4-16-2008 (3) The.•• 24A (3) The requirements andprocedure on the WorkArea bid Part Four referred to in sub-artlcle (1) is conducted with the Objection bidding procedure referred to In ArtJde 21, Article 12, Article26 andArticle 23 sub-arnde (1) / sub-article (2) andsub- (1) Work Area bid participantsfeeling they had suffered article (3)3 letter except for the other party awarded a losses indiVidually or severally, maysubmitobjections Preliminary Survey assignment,. who i& d"rectly ~ared if it ls found out there exists; asbeing successful in Phase One. a. Deviation on the provisions and procedure stipu- latedin Bid Documents;

Article 25 b. Certain engi!'\QQril'\9 causing unhealthy r:om(l@tl- The procedure for the determination of WorkArea tlon; and/or bid winner referred to in Article 23 sub-article (3) for a c. Authoritymisuse by the Work Area BidCommittee Work Area as a resultof a Preliminary SulVeY assignment is as follows: and/or other officialshaving the authority. a. The WorkArea BidCommittee in Phase Two provides chances to business enterprises being bid participants, (2) The objection referred to in sub-artlde (1) shall be that hod passed pre-qualification and the other party submitted in writing to the Minister, governoror re- awarded Preliminary Survey assignment to submitbid gent/mayor in accordance with his authority fIVe (5) priceof vaporor electricenergy. days at the latestfrom the notification lannouncement b. The Minister. QOVemor or regent/mayorin accordance of the Work. Area bid winner. with his authority stipulates the WorkArea bid winner (3) TheMinister, govemoror regent/mayor inacmrdance based onthe lowest price of vapor or electric energy, with his authority is obliged to response five (5) days by means of: at the latest from the receipt of the objectionletter. 1. stipUlation of bid partldpants'rating is made baseo (4) In the event the objecOOn rererreo to In sub-artk.1e (2) on evaluation of technical quality/financeandthe isfound outto be true, the bid on the WorkArea should Jowest pnce of vaporor electricenergyamong the be repeated. bid prices. 2. In the eventthe bid price of vapor or electric energy PartRve submitted bythe other party ishigher thantheother Re-Bid bidparticipants. the other party Is given the right to Artidl!! 27 make changes to its bid so as to be at leastequal (1) The Work Area bid referred to inArtide 21,Artide 2.2., to the lowest price of vapor or electric energy sub- and Artide 23 shall be repeated if the number of bid- mitted by oth¢r bid participants. 5Ubmitting business enterprises is less than two (2) 3. If the other partY Is willing to makechanges of the participants. Bid price referred to in number 2, the concerned (2) If after a WorkAre;" re-bid as referred to in sub-article other party Isstipulated asthe Work Area bid win- (1), the partidpants Isstllliess than two (2) pertld- n~1 by the Minister, governor or regent/mayor in pants, then the Work Area bid partidpant meeting the accordance with hisauthority. 4. If the other party is notwilling to makechanges an adminiStratiVe, technical, and financial requirements the Bid pric@ I'@ferredto in number 2. the Minister, may be directJV appointed• governor or regent/mayor inaccordance with his (3) A Work Area bid as a result of a Preliminary Survey authoritystipulates the business enterprise bidding asslgnment-meant in Artides 24 and 25, in the event the lowest price of vaporor electriC energyasthe there are no other business enterprises submitting a work Area bid winner. bid, then the other party who was aWGlrded Preliml- 5. The business enterprises asWorkArea bid winner nary Survey assignment, to the extent it meets the referred to in number4 shall paycompensation on admlnistrative, technical, andfinancial requirements, the data (awarded wmpensation) to the other party. mtlly be appointed directly. Business ~ 7649-76S0/4~ 16-2008 CHAPTER IV... 25A OiAPTERIV (2) The time period to perform the ~sibility Study re- IUP(MINING BUSINESS PERMIT) ferred to in Article28 sub-article (1) letter b isvalid for PartOne two (2) yearsat the latest from the completion of the IUPAward Exploration period. Artide28 (1) The exertionof Geothermal Resources covers: Article 31 B. EXp)oranon; (1) !UPHOlders are Obliged to submita report on the result b. Feasibility Study; and of the Feasibility StudyIn! writing to the Minister, gov- c. Exploitation. ernor or regent/mayor in accordance with hisauthor- (2) The exertion of Geothennal Resources referred to in ity prior to perfonning an Exploitation by ottnching: sub-artide (1) may be performed by business enter- a. Exploitation short term planand longterm plancov- prises only after beingawardedan IUP. ering work plan and budgeting p1anj and (3) The Minister, governor or regent/mayorin accordance h Dedc;ion on the feasibilitY of the environment based with his authority awards the IUP to business enter- ' on study result of Analysis on Environmental lm- prises succeeding as WorkArea Bid winner. pacts or an approval of EnVironmental Management (4) Earn business enterprisecan only be awarded one {1} Effortsor Environmental Monitoring Efforts. WorkArea. (2) The Exploitation long term plan referred to in sub-ar- (5) In the eventa business enterprise intends to exert more tide (1) letter a covers: than one (1) WorkArea, a separate legal entity should a. Location of development drilling points; be established for each Wurk Aled. b. Production well developmentactivities; (6) In a period of siX (6) monthsat the latest from the IUP c. Funding; stipulation, the IUP Holder referred to in sub-artide d. Preparing productIOn piping channels; and (3) is obliged to commence activities. e. Geottlermal utilizationptan, Artide 29

Article 32 (1) The period to oerform the Exploration referred to in (1) 1"he period to perform the Exploitation referred to In

Article 28 sub-artide (1) letter a is valid for three (3)

Article28 sub-artJcle (1) letter c is valid for 30 (thirty) years at the most from the issuance of IUP, and ex- years at the mostfrom the expiration of the explora- tendable for two (2) times at the most, for one (1) tion period, year respectively. (2) The period to peJform Exploitation may be extended (2) Application for an extension should be submitted in for another 20 (twenty) years at the most for each writing to the Minister, governor or regent/mayor in accordance wtth hIS authority no later than three (3) extension. (3) In granting an approval for the extension of Expfoita- months before the expiration of the Exploration pe- tion performance period referred to in sub--artfde (1), riod. (3) The ~ extension referred to in sub-artickl (1) the MiniSter, governor or regent/mayorin aa:ordance may be granted If It meets technical and financial re- with hisauthority should oonskfer factors of Ge0ther- quiA!ments. mal potential reserve in the WorkArea coricemed, p0- tentials, or marketcertainty/needs, technk:al teasibll- Artide30 itV. economy ~ the environment. (1) If afterthe performance d an Exploration Iscompieted, the IUP holder is obliged to submit the Feasibility Study "rode 33 Plan as meant in Article 28 sub-artide (1) letter b to IUP holdeP-l who had performed Exploitation moy the MJnlster, governoror regent/mayorin accordance execute Geothermal utilization directtyor indirectlyin ac- with his authority. cordance with legislation provisions. Business News1649-7650/+16-2008 Artlde34_.. 2M

Article34 IUP Holders have the right for a suspension of Exploitation validity period referred to in Article32 sub-ernde(1) from the Minister, governor or regenl;{mayor in accordance with his authority until it obtain a permit for Geothermal utilization in accordance with legislation provisions. Part Two T-emporary cessation Artide35 (1) Temporary cessation of the exertion of Geothermal Resources may be granted to !Up holdersin the event of force majeure and/or barring situation resulting in the cessation of a part of or the whole activities of Geothermal Mining Business. (2) The granting of the temporary cessation of Geothermal Resources exertion referred to in sub-arnde (1) does not reduce the IUP validity term. (3) Application for temporary cessation of Geothermal Resources exertion shan be submitted to the Minister, governor or regent/mayor in accordance with his authority no later than 14 (fourteen) da,vs after the occurrence of the force majeure and/or barring situation resultingin the cessation of a part of or the whole activities of Geothermal Mining exertion. (4) The Minister, governor or regent/mayor inaccordance with hisauthorityshouldissue~awlitten dedsion on Whether to accept or reject with reasons there-of, the application referred to in sub-article (3), 30 (thirty) days at the latestfrom the receipt of the application. (5) The period for thetemporary cessation dueto forcemajeure and/orbarring situation isgranted for one'(1) yearat the latest from the date the application was received by the Minister, governor or regent/mayor in accordance with his authority asmeant in sub-art/de (3) and may be extended once at the most for a period of one (1) year. (6) Further provisions on tempara ry cessation of Geothermal Resources exertion due to force majeure and/or barring situation IS regulated in the.M'nisterial ~uIation. PattThree Retuming theWorkAr~ A.rticle 36 The width of a: WoJ* AfBlfcr-Explorationreft!m!dto in Article28sub.-artide(1)-1elter a which may be granted to a bl:fS~rtse~been'~df\..WP-9hatt not ex<:eed 200,000 (two hundred thousand) hectares. ArtiCle 36 . ([0 De continued) 21A GEOTHERMAL BUSINESS ACITVrTY (Government Regulation No. 59 Year 2007 dated November 5, 2007) rContinued from Business News No. 7649-7650 pages 18A-26A] Part Three Article 40 RebJming the Work Area (1) uunng or beforethe expiry date of a feaSibility Study

Article 36 period, IUP Holders had to retum in phases a portion Thewidth of a Work Area for Exploration referred of the Work Area no longer utilized to the Minister, to in ArtiCle 28 sub-aJ1Jeje (1) letter a Which may be granted governor, or regent/mayor in aa;ordam:e with hls au- to a business enterprise having been awarded an IUP shall thority notexceed 200,000 (two hundred thousand) hectares. (2) In a period of two (2) years at the latest after the completion of Feasibility Study activities, IUP Holders

Article 37 had to return the Exploration Work Area, hence the (1) The widthrt the Work !yea for Exploitation referred to WorkArea heJd for Exploitation shall not exceed 10,000 in Artide Z8 sub-artide (1) letter c which Uln be granted (ten I:tlour.and) heda~_ to aIUP holder shall not: exceecII0,OOO (ten thousand) (3) If the width of the original WOrk Area tor Exploration is less than 200,000 (two hundred thousand) hectares, hectares. (2) In order to obtain a Work Area with ell width exoeeding the IUP Holder canstill hold an ExploItation WOrk Area as of 10,000 (ten thousand) hectares asmeant in Ar- the provisions referred to in sulrarticle (1), the IUP ticle 37 sub-artlde (I). holder should firstly receive anapproval from the Min- ister, governor or regent/mayor in acc::ordance with

Article 41 his authorityattached with a report on the installed (1) Prior to returning the Work Area meant In ArtIcle 38, capadty of the geothermalfield development.

Art1de 39 and ArtJde 40, IUP Holders should pet10rm actiYitIes on the redamatlon and preserWtIon of envi- Artide38 ronmental functions. (1) IUP hokIers may return a part of its Work. Area to the (2) The returning of the Work. Area meant in Artlde 38, MIMI:e", ~ or ~/mayorin acr:ordallC@with Artlde 39 and Article 40 shall be declared legal after hisauthority before-the IUP term expires. receMng a written approval from the Minister, gover- (2) In the eventa IUP holcler returns aU of itSWork Area as nor, or regent/mayor in accordance with his authority. meant In sub-artide (1), the IUP hokjer shoukl firstly (3) Further prov!SjOns on the procedure ancl requirements submit other data and obligations tontai1ed Inthe !UP. on returning the Exploration Work Area referred to In sub--artide (1) in part of or wholly are regulated in the Artide39 MlnlsteriDl Regwlation. (1) Ifdurfng the tennofthe Exploration referred to tn Ar- tk:Ie 29, geothermal energy reserve which can be pro- Part Four duced commercially is not discovered, the !Up holder IUP Tenninatioo had to return the whole Work Area to the Minister, Artide42 governor, or regent/mayorIn acx:orda~ with his au- !Up is terminated if: thority. a. validity tenn ~pi~; (2) IUPHolders had to return the whole Work Area to the b. returned; Minister, governor, or regent/mayor lnacmrdance with c.cancellecl; or his authority after the IUP period expired. d. revoked Business News 7651{4-18-2008 Artk:fe43.... 22A Artide43 Article 47 In theerent thetenn stipulatecI in the lUPexpires, (1) If the IUP referred to in Artides 43 through 45expired, and application tor tile extenSion orUle IUPwas· not SUb- IUP Holders are obliged to: mitted, oran app'ication for an extension cfthe IUPdid not a. Settle all financial obligations, andfulfill and com- meet requirements, then such IUP is tenninated. plete all of its obligations in accordance with legis- lation provisions; Artide44 b. Execute all stipulated provisions related with the terminatfon of the IUPi (1) IUP Holders may return the !UP wfth a written state- c. Take allsecurity measures on goods and buildings rpent to the Mlni~, govprnor, or ~nt/mayor in as well as tile COfl(jltiOn Of land In itS surrounding accordance with his authority if ExpIoration·results did likely to eneJaflger public safety; not yield exJEted eeooomic values. d. In a period of six (6) months at the latest from the (2) The rE!tllming of the !Up referred to in sub-artide (t) is tenninatiOn of the IUP, to remove all goods, build- declared valid after being appmvedby the Minister, Ings and equipment owned that are still existing governor, or regent/mayor Inaccordance with his au- within its former Work Area, except buildings US"" thority. ablefor public Interest; e. To return the whole WorkArea and to hand~r Artide45 aU data, efther in the form of analog or digital re- The Minister, governor, or regentJrnayor in ac- lated to the performance of the Geothennal Re- cordance with his authorftY canrevoke the IUPJf the IUP sources exploitation to the Mlni~ter, governor, OT Holder: regent!mayor inaccordance with his authority. a. Did not settle the light on land ~, growing plants, (2) In the eNentthe goods, buildings and equipment re- and/or buildings damaged due to the exploitation of fum:!d to in !illb-artide (1) letter d cannot be removed Geothermal Resources in aocordancewith legislation from the related former Work Area, the MiniSter, gov- provisions; ernor, or regent/mayor Inaccordance with hisauthor- b. rnd mt: perform Exp)oration ina periOd of siX (6) months ity is entitled to award permit to a third party for its removal. after the !Up award; (3) Thereturning of the IUP referred to in sub-article (1) c. Did notperfonn Feasibility Study in a period of six(6) letter e is declared validafter the IUP Holder had ful- months after the IUPaward in the event the Explora~ filled all obligations and had received an al'P'fO\'3l in tion is performed under the control of the Minister; writingfrom the Minister, governor, or regent/mayor d. DId not perform Exploimtlon in a periodd two (2) years inaccordance with hisauthority. after the Exploration period ended. (4) Further proviSiOns onihe securitY and transfer of own~ e. In a periOd Of one (lJ year Since the IUP Holder re- ershlp let'en"ed to in sub-artide (1) letterc and letter d ceived a business pennltfor the utfIlzation of geother# is regulated in the Ministerial Regulation. maldid not perform any ublization activities; f. Did ACit. pay state revenue in the form of tax and non-- tax in aa:ordance with IeglsIation provisions; OW'TERN g. Did not meet stipulated requirements in accordance RIGHTS AND 06UGAllONS OF IUP HOlDERS with Egislatinn provic;lons; or Part One h. Did not meet requirements on work safety and health, Rights of lUP Holders enviromtental protEdiOn, and GeothennaI Miningtech~ Arttde4& niques. (1) IUPHolders have the rights to: a. carry out Geothermal Mining Business ActIVitIeS in

Article 46 the form of Exptoration, Feasibility study, andex- If the IUP referred to in Artides43 through 45 is ploitation withln its Work Area after fUlfilting Iegis- terminated, then all rights of IUP Holders ended. I8tion provisions; Business News 765114-1&-2008 b. use•.. 23A b. use dataand information for the duration of the !Up b. construction of fieldand production operations facilities validityterm in its WorkArea; of Geothermal Resources; c. receive taxationfacilities in accordance with legis- c. construction of producing wells; laton provisions. d. construction of mrrastructures to supportt:ieothermal (2) In performing Geothermal Mining Business Activities in Exploitation and to capture geothermal vapor. the form of Exploration, Feasibility Study, and Exploi- totion referred to in sub-article (1) letter <:I, [UP Hold ershave the rightsto: Part Two a. enter and carry out activities in the related Work Obligations oflUP Holders A~;

Article 53 b. usepublic facilities and infrastructureS; (1) IUPHolders must: c. utilizeGeothennal Resources for direct utilization; a. understand and obey legislations on work safety d. sellproduced Geothermal vapori and/or and health, environment protection, and fulfill ap- e. get an extension ofIUP period. plicable standards, covering: 1. carrying out business in accordance with permit Article '\9 possessed; !Up Holders have the rights to perform all Geo- 2. field development and utilization of Exploitation thermal Mining business activities referred to in Article 48 results from each discovered potential; continuously after fulfilling requirements on: 3, fulfillment of requirements on work safety and a. work safellY and health, health, environment protection, andGeothermal b. environmelntal protection, and Mining techniquesi c. geothermal mining techniques. 4. submission of long-term plan of Exploration and! or Feasibilfty study oovering work plan andbud-

Article 50 get plan; In the Exploration phase, IUP Holders have the rights to perform Exploration using good and proper meth- S. submission of exploitation short tenn plan and odsand equipment, covering: longterm plan covering work. plan and budget a. geology survey; plan; and h_ genphysi~ c;urv~; 6. oompilation of post-mining plan documents. c. geochemk:al survey; d. Temperature curve (Iandaian) drilling; and b. to manage the livingenvironment covering actiVi- e. Drilling of Exploration wells,and production testing. ties on the prevention andtackling of pollution, res- toration of\tie IMng ernironmentfunc:lions, and per-

Article 51 formance of reclamation. In the Feasibility Studyphase, IUP Holders have c. to pay staterevenue in the form of tax and non-tax the rights to make evaluations on reserves and on the fea- Inaccordance with legiSlation provstons, sibi~ty of teehnlcal, economical andenvironmental aspects d. to prioritize the utilization of domestic goods, ser- based on common standards. vices, technology and engineering; anddesign ca- pability tran~r~Jllly alit.! competitivelyi' ArtideS2 e. to providesupport on research and development In the Exploitation phase, IUP Holders have the activities on geothermal science andtechnologYi rights to perform all adivitie5 pursuant to results of rellsi- f. to provide support on competence building and bility Study, induding: development, andthe nurturing of human resources a. development welland fe-injectionwelldrilling; in the field of!geothermal; Business News 7651/4-18-2008 g. to ... 24A g. to perform development and empowerment pro- c. Report on results of the performance of environment or::tm<:. fnr thf> loral cnrnmunity; management plan and environment monitoring pla.n, h. to submitperiodic written report of work plan and and performance of Geothermal Mining Business actiVi- d. Use of environment-friendly technology. ties to the Minister. oovernor, or regent/mayor in accordance withhis authority. Paragraph 3 Geothermal Mining Techniques (2) The periodic written report referred to in sub-article Artide SG (1) letter h shall bemade in accordance with the fol- IUP Hotders areobliged to meetGeothermal Min- lowing provisions: ing technique performance referred to in Artide 53 sub- a. For Exploration and Feasibility Studyactivities, re- paris to be submitted shall bein the tonY! of month}y, artlde (1) I~~ i:I number " cunslstlng of: quarter1y, and annual reports, and annual work a. perfonnance of goad and proper norms of mining tech- plan;or nique and Geothermal Exploration or Exploitation stan- b. ForExploitation activities, reports to be submitted dardS; shall be in the form ()f rnonthty, quarterly, and an- b. ability to perform Exploration on the whole WorkArea; nual reports,and annual work plan. c. required fund/investment for Geothermal Exploration and ExpJoitabon; Paragraph 1 d. Procedure to calculate the amount of resources and Worksafety and Health reserve;

Article 54 e. Planning and constrUC.tIOn of Geothennal DevelOpment; rup Holders areobliged to meetwork safety and and health perfonnance referred to in Article 53sub-artide (1) f. Efficiency inthe production Of Geothermal Pe;ources. letter a number 3 covering: a. availability of worksafety and health organization and personnel including chief of miningtechniques; Article 57 b. worksafety andhealthadministration management; Further provisions on the perfonnance of wor\( c. the fulfillmentof the secUl1ty of equipmen~ work envi- ~ and health, environment protection, and mining teen- ronment, workmethods Md process; and niques, shall be regulated in accordance with legislation d. availability Ofhandling procedure and analysis of work provisions. acddent and health. Paragraph 4 Paragraph 2 Exploration and Exploitation Long Tenn Plan E.nVlronmetltal ~ ArtfcleS8

Article 55 (1) Before the start of a fiscal year, IUPHolders are obliged [UP Holders are obliged to fulfill environmental to submitthelong tenn planof Exploration and/or Fea- protection performance referred to in Article: 53 sub-or- sibility Study activities referred to in Article 53.sub- tide (1) letter a number 3, valued from several aspects: artiCle (1) letter a number 4, to the Minister, governor, a. clec.ision on the feasibility rI the livingenvironmentbased or regent/mayor inaccordancewith hisresponsibility, on resultsof analysis. study on environmantal imp2lcts _ three (3) months at the latest from the start of tile or an approval of environmental management efforts and environmental monitortng efforts; Exploration or Feasib"ity study phase. b. fulfinment of allenvironment QualitY standard andenvi- (2) The Exploration longterm plan referred to in sub-ar- ronment damage standard criteria; ticle (1) covers activity plan andbudget plan. 6usiness News 7651/1-18-2008 Article 59 ..... 25A

Article 59 Artide62 (1) Before the start of a fISCal year,IUPHolders areobliged (1) IUPHolders are obligedto allocate guarantee fund for to submit the short term plan and long tenn plan of GeOthermal Resources post-mmmq amvmes In a bank. Exploitation activities referred to in Article 53 sub-ar- (2) The obligation referred to in sub-article (1) should be ticle (1) letter a number 5, to the Minister, governor, performed from the commencement of the Exploita- tion period and calTied out through a work and budget or regent/mayor in accordance with his responsibility, plan. one (1) year at the latest from the end of Feasibility (3) The placement of the allocated fund referred to in sub- Study activities: article (l) and in sub-article (2). shall be agreed uoon (2) The Exploitation long term plan referred to in sub-ar- byIUPHolders, the Minister, governor or regent/mayor ticle( 1) covers activity planand budget plan including to function asspecial reserve for reclamation and post- the amountof reserve. miningactivities in the related WorkArea. (4) Furtherprovisions on the procedure of depositing, the

Article 60 amount and the lquldation of post-mining guaranty (1) Adjustments onthe Exploration and Exploitation long fund, is regulated in the Ministerial Regulation. term plan reterred to in Article 58 and Article 59 may be perfonned each yearin accordance with conditions encountered by means of annual- work plan and an- Paragraph 6 nual bUdget plan. State Revenue (2) The annual work planandannual budgetplan referred Article 63 to in sub-article (1) must be submitted to the Minister, (1) IUP Holders are obliged to pay state revenue in the govemor,or regent/mayor III dCI.UnJdllc~ wiU. hi:> re- form of tax and non-tax as referred to in Article 53 sub-article (1) letter c in accordance with legislation sponsibility, two (2) months at the latest before an- provisions. nual work planand annual budget plan proceed. (2) The tax state revenue referred to in sub-artide (1) consists of: Paragraph 5 a. Tax; Post-Mining Plan b. Entry duty and other contributions on exdse and Artil.:Je 61 import; and (1) In a period of two (2) years at the latest before the c. Regional tax and retribution. tennination of Geothennal BuSiness ActMt:ies, IUPHold- (3) The non-tax state revenue referred to In sub-article ers lire obliged to compiJe lind submit Post Mining Pion (1) consists of: documents referred to in Article 53 sub-article (1) let- a. State conbiblltion in the form of Constant Contnbu- ter a number 6 to the Minister, governor, or regent! tlon and Production COntribution and other state mayor in acr:ordonce with his responsibility for approval. contributions in accordance with legislation provl- (2) The Post-Mining Plan referred to in sub-article (1) con- sions;and sists of, among others: b. Bonus. (4) FurtherptovislonS on the rontJibution andtariff of non- D. Rcmovill of installations and reclamation plan; tax state revenue referred to in sub-artide (3), is regu- b. Handling of the living environment oonsisting rl rec- lated in the Ministerial Regulation. lamation plan of post-mining landadjusted to Spa- tial Layout Detailed Plan when the analy!:is on en- paragraph 7 vironmental impacts had been approved; and Utilization of Domestic Goods, Services, c. Handling of community sodal program duringtran- Technology, And Engineering and Design Capability sition periods,and extended development programs. Article 64 Business News 7651/4-18-2008 (1) IUP ... 26A (1) IUP Holders are obliged to prioritize the utilization of Article 67 domesticgoods, services, technology, and engineer- In the performance of the developmentand em- ing and design capability referred to in Article 53 sub- oowennent nroorarn for the 'local community referred to article (1) letter d based on applicable standards in in Article 66, IUP Holdershad to coordinatewith the local accordance with legislation provisions. provincial government or regency/municipality government. (2) In the eventIUPHolders useservices companies either foreign OFdomestic, it is mandatoryto meet the provi- sionsof classification and qualification of Geothermal CHAPTER V Miningservices companies. GEOTHERMAl DATA (3) Rlrther provisIOns on the operenons or GeOthermal MIn- Article 68 ing services companies referred to in sub-article(2) is (1) All data and information acquired in accordance with regulated in titleMinisterial Regulation. IUP provisions shall belong to the state, and arrange- ments on its utilization shall be made by the Minister. (2) The Ministerstipulates arrangementson the manage-

Article 65 ment and utilization of data and information acquired (1) In the eventthe goods, services, technology, and engi- from: neeringand designcapability referred to in Article 64 a. prelimmary survey perrormed undertne control of sub-article (1) have not yet been produced domesti- the Minister, governor or regent/mayor and the cally, IUPHolders canget fadlities to importsuch goods other party; and services. h. E"xl'llnrnHnn performed under the rontrol of the Min- (2) Goods and services referred to in sub-artlde (1) should isterand !Up Holders; and meetstandard requirements! quality, efficiency of op- c. Exploitation performed by IUP Holders. erations costs, guaranty on delivery time and can as- Sure gUlIranty on efter-selesservices.

Article 69 (3) Further provisions on the form and procedureon the (1) Management of the data referred to in Artide 68 sub- provision of the fadlities referred to in sub-article(1) article (2) consists of data acquisition,administering, ls regulated in the Finance Ministerial Reoulation. processing, arranging, storing, rnaintcncnce, and dis- posal. Paragraph 8 (2) Utdization of the data referred to in Artide 68 sub- Community Development and Empowerment Program erode (2) is for:

Article 66 a'. Stipulation of the classification of potentials and (1) Duringthe Exploitation phase, IUPHolders are obliged Work Area; to perform local communitydevelopment andempow- b. CampHanon of NationalElectricity General Plan and erment programs referred Lo in A,Udt: 53 sub-article Electric Power Supply Business Plan; (1) letter g. c, Planning for Geothennal utilization for direct utiliza- (2) The development and empowennentprograms for the tion; local community referred. to jn sub-article (1) includes ft. DPh'nnination of pot~ntial Geothennal resources participation in the developmentand utilizationof ca- and reserve nation-wide; and pabilitypotentials of the local communityby means of: e. Developmentof Geothennal science and technol- a. using local manpower, services and products in ogy. aa:ordance with the required competence/specifi- cation; b. assisting in community SOCial services; Article 70 c. assiSting in the enhancement of health, educanon, (1) Sending, giving and/or t:ransferring data acquired from and training of thecommunity; and/or Preliminary Surveys, Explorations and Exploitations d. assisting in the developmentof meansand infra- referred to in Artide 68 sub-artide (2) must be with a structures. pennit of the Minister. Business News 7651/4-18-2008 (2) The ..... 27A (2) TheMinister stipulates the types of datawhichshould Article75 get the penni! referred to in sub-artlde (1). (1) The basic data, processed data, and interpreted data referred to in Article 74 are classified as confidential Artide 71 for a certain period. (1) IUPHolders areentitled to manage data acquired from (2) The confidentialitf penod of the data referred to in Exploration andExploitation activities in its Work. Area sub-ertide (1) is as follows: as meant In Article 69 sub-article (1) for the duratiOn a. General data is stipulatedfor four (4) years; of the validitytenn of the IUP,exceptfor the disposal b. Basic data is stipulated for six(6) years; ddata. c. Interpreted data is stipulatedfor eight (8) years; (2) !Up Holder::,. cue obliged to keep the dottI that pre used (3) It a Work Area ISreturnee to the Minister, ~nor ur as meant in sub-artlde (1) within Indonesia Mining regent/mayor referredto in Articles 38, 39and 40, all Jurisdiction Area. data of the related Work. Area shall nolonger be das- 5ified as confidential data.

Article 7Z (1) If the IUPtenninatesas meant in Articles 42, 43, 44, CHAPlERVI and 45, IUP Holders are obliged to bend-over all data NUKIURINGAND SUPER\llSlON acquired from Exploration andExploitation activities to Artide 76 the Min\Ster, governor, or regent/mayor in aa:ordance (1) The Minister performs nurturing and supervision on with- his responsibil;ty. the operations of geothermal mining business per- (2) lUP I10lders are obliged lo hClnd-over to the Minister, formed by the governor, regentand ~r. governor, or regent/mayor in accordance with hisre- (2) The Nurtunng and supervision referred to in sob-er- sponslbUity, all of the data acquired from Exploration and Exploitation activiti~ in its WorkArea if the Work tide (1) covers stipulation of policy execution, guid- Areais returned as meantInArtides 38, 39, and 40. ance, nurturing, tacnnatJOn, dIreCtiOn, supervtston, (3) TheGovemor and Regent/Mayorare obfiged to submit monitoring and trainingin thefo/JOwIng matters: thedata receiVed from IUP Holder!ireferredtoIn sub- a. Performance d Preltrntnary 'Survey; artlde (1}andsub-artide(2) to the Minister. b. Work. Area BId; c. PennitS; Artide73 d. Nurturing and mntml on IUP Holders; and further provISIons on the management and utili- 8. Management of geOthermal data and infnrmatinn. n zation of data referredto in Artides 69, 70, 71, and are (3) Further provisionson the nurturing and supervision re- regulated in tlheMinisterial Regulation. ferred to in sub~artide (2) are regulated in the Minis- terial Regulaticm.

Article 74 Dataare classified as follows: Artide77 a. ~data are data coocemingthe identification and The Mini5ter,govemor, or regent/mayor in ac- geographic location of Geothermal potentials, reserve, oordat1ce with hisresponsibility perfolm nurturing and su- and Geothermal ExploItation; pervision on the performance of geothennat miningbusi- b. Basic data,l.e,a description or amountrA recotding or ness performed by IUPHolders. noting results ot geo\Oglcal, geophySICS, geod1emIc:al, temperature curve, Exploration andExploitation activi- Article 78 ties; The Nurturing and supervision referred to in sub- c. Processed data, l.e, data acquired frorJ'l dnalysls and article (l)oovers: evaluation results of basic data; and a. ExploratiOn, oonsistlng of: d. Interpreteddata, i.e. data acquired from interpretation 1. technique norms; results of basic data and/or processed data. 2. standards: Business News 7651/+18-2008 3. planning... 3. planning; h. UtUiZation of domestic goocIS, sel'V\CeS, technology, and 4. budget; engineering and designcapability. 5. perfonnance of activities (timely); 6. reporting; and i. Development of Indonesian manpower, consisting of: 7. estimated resources-and reserve' - , 1. working capabilityand transfer of technology; and 2. empowerment and use of local manpower. b. Ex%itation, consisting of: 1. technique norms; j. Development of the local enVironmentand ~mllnity, 2. standards; consisting of: 3. planning; 1. Integration of community developmentprogram; 4. reserve; 2. partnershipbetween IUP Holders and the commu- s. pt'Odud:loli; nity; 6. perfonnance report; and 3. realiZatIon of the use of oommunity development 7. optimization of the utI1i2ation rA ~rmal energy. fUnd. C. Finance, consisting of: k. Command, development and implementation of Ge0- 1. budget planning; thermal MiningtechnoJogy,_ consisting of; 2. realization of expendItUres; 1. Exploration and Exploitation tedlnobgy; 3. Investments; and 2. implementation d technique normsand standardsj 4. fulfiUment of paymentobligations. 3. calculatiOn of reserve and capacity of Geothermal 5Ources;and d. Pr«essk1g d Geothennaf data, consiStIng of:: 4. ted'mIogy to averenme Exploitation const:rU\ts. 1. resources and-~ 2. ilbsor'ptlon Mdoutlet area; I. Other adMties in thefleId d -Geothenni!tt Mtnlng-busi- 3. injeCtion welb; ness actiYlies- to theextent it cortQmS. the pubIC IntEr- 4. productionJdevelopmsnt WEIIki; est..consisting of; 5. reservoir c\larae:teristics; and .1. ExeQunon ofpravistorJs cooceming ttM! disbmce of 6. pmduction. productlon d'lflliny to publh:fi2d1itic:lj e. Conservation of minerals, consiSting of: 2. settlement of indemntfication on damages caused 1. optimization of tile. lfI:iUzation of ~I Re- tw ~ idMties;and souroes ~ntials;. 3.~lIring publk fa~, hMv places: -aJKJ- cultural 2. iJtillzation oftailing mineralS; preservations. f;W<Rit:safeW'tDd~Ith, consisting on 1. V\lOI'k.saretv andheIIth organization and personnel; m. Geothermal managementi-and Including chiefof miningtec:tmiques; 2. ITIilJllagemerrt: of work safety and health administra- O. -Implementation of nonTISd economy and~i'Ilques, tiOn; -consisting -of: 1. sectJFilY of equlpf'Tleftt,. VI/Qft. environment, work meth - 1. FeasibUity analysis procedure; odsand processj and 2. utitizetion qfnew technology; 4. work aa:ident and heafth handUng prdcedures and analysis. 3. efficiency, rationality dactMtles', and operations 005(5; g. Management of liVing environment andreclamation, 4. analysis of sensrtivity of changes; and consisting of' 1. compilatIOn and perfonnance of analysison environ- 5. feaSibility study covering ptanning, analysis on envi- mental impacts, or environmental management ef- ronmental trnpacts; or PnVimnmentai management forts and environmental monitoring efforts; and efforts and environmental mOnitoring efforts, 2. performance of reclamation. economy, evaluation of reserve; andperformance. BuIll.- News 7651/4-18-2008 Article 79... 29A

Article79 (2) The written warning referred to in sub-article (1) is Control on the performance of work safety and imposed for a maximum of three (3) times with a wam~ health, environmental protectionand Geothermal Mining .inQ periodof bne (1) month respecnvelv. technique is perfonned bythe Mjping Inspector in accor- Artide83 dance with legislation provisions. (1) In the event!UP Holders imposed of a written warning sanction after the expiration of the third written warn- Artide80 ing referred to in Artide 82 sub-artide (2) had not yet The governor, regent, and mayor In accordance executed its obligations, the Minister, governor, or re- with his authority are obliged to report results of the per- gent/mayorin accordance with his authority shall im- formance of Geothennal Mining business in his area re- pose an administrative sanction in the form of tempo- spectively once in everysix (6) months to the Minister. rary cessation of all Exploration or Exploitation activi~ tiss referred to in Article 81 sub-article (2) letter b. a-tAPTER VII (2) The administrative sanction in the form of temporary ADMINIsmAllVE SANCTlONS cessation of all activitiesreferredto in Article 81sub- ArticleS1 articleo(1 ) shall hP impo5Pfi of for a m::tYimurTl of three (1) The Minister, govemor, or regent/mayor in accordance (3) months. with flis authorityare entitled to impose administrative (3) The administrative sanction referred to in sub-artide sanctions to IUP Holders for violations on provisions (2) may be revoked if during the sanction imposing referred to In Artide 28 sub-article (6), Artide 30sub- period, the IUPHolders fulfilled its obligations. article (1), Artide 41 sub-article (1), Article 38 sub- article (2), Artide 39 sub-article (1), sub-artlde (2), Artlde84

Article 40 su~rticIe (1), su~rticJe (2), Article 41 sub- The adminisb'atlve sanction in the form of permit artlde (1), Article 53 sub-article (1), Article 54, Article revocation referred to in Artlde 81 sub-article (2) letter c 55, Artide 56, Artide 58 sub-article (1) , Article 59 shall be imposed on IUP Holders who Is lmposed on with sub-article (1) , Artlde 61 sub-artide (1) I Article 62 the administrative sanction referred to inArtlde 83 sub- sub-artlde (1) , sub-article (2), Article 63 sub-artlde artide (2) who did not: execute its obligations until the ex- (1), Artlde 64 sub-article (1), sub-artiCle (2), Artide pirv delle of tile ltmpOf dl Y u=:ssation jJeliod ordll explot (;l- 66sub-artide (l), Artide 70 sub-artiCle (I), Artide oon or exploitation activities. 71 sub-artide (1), sub-article (2), Artide 72 sub-ar- ticle (1) or sub-article (2). otAPTfRvm (2) The admlnlsb'ative sanction referred to in.sulrarticle lRANSITlONAL 98OVlSIONS (1) is In the fofm of: AJtidIt.8S a. written wamtng~ When . . GrNemmeAt MguladOncommences to b. ten1ponuy~ ofal~orExplaitaOOn come to effect, the Autbority, Rermit for Geothermal Ex- . , or actiYitieS. pkJitation for 8ectric PowerGenerators or Geothermal Re- c. revocauon d permit sources Exploitation Contracts anel/or vapor or t::lectrte Power Purdlase CDntracts in a WorkArea existing before Artide82 this Government RegulatiQn comefi to effect, remains in (1) The written warning referred to in Artlcjp, 81 sub-ar- force until the expiry date of such Authority, Permit, or tide (2) letter a is imposed on IUP Holders for viola~ COntract, and may be extended by adhering to this Gov- tions of the provisions referrecl to In ArtiCle 81 sub- ernment Regulation. article (1). Business News 7651/+ 18~2008 Artide86.... 30A Artide 86 ELUOOAllON If in the Work Area referred to in Article 85, Ex- OF GOVERNMENT REGULATION OF THE ploitation activities had not yet been performed until octo- REPUBUC OF INDONESIA No. 59 Year ber 2010 at the latest, then the Holders of such Authority, 2007 Permitand Contract are obliged.to retum its Work Area to CONCERNING the Government by adhering to this Government Regu\a~ GEOTHERMAL BUSINESS AcrIVmES tion. 1. GENERAL

Article 87 Geothermal Resources is a blessing of the One Theexerdse of the authority in the management and Only God providing benentsto support a continuous of Geothermal Mining in the form of Authority, Permit or development, providing total added \/alue, increasing the Contractreferredto in Article 85 is performed by the Min- State revenue and income of the public to motivate na- tional economic growth for the enhancement of the prnc;:- ister. perity and welfare ofthe people. The State of Indonesia is located on the longest CHAPTER IX volcanic belt in the world. Asa country passed by a volca- CLOSING PROVISIONS nic belt, potential geothermal resources spread across from

Article 88 the Island of Sumatra, Java Island, Bali Island, Nusa ThisGovemmpnt Regulation comes to effect from Tenggara Islands, Maluku Islands, up to the Island of Sulawesi. Considering the large Geothermal Resouru:~ the dayof enactment. potential of Indonesia, the role of geothermal utilization can be increased in line with the national energy policy For public cognizance, this Government Regul?l- particularlyin the aspects of conservation and diversifirn- tion shallbe announced in the Statute Book of the Republic tlen of energy, and can be utilizeddirectlyfor drying farm- of Indonesia. ing products, heatingof houses/hospitals in coolareas, as recreationand medicalareas; henceit is very reasonable if the exploitation of geothermal is determined to be one Stipulated in Jakarta of the accelerators to increase the prosperityand welfare 011 November 5, 2007 of the Indonesian people; PRESIDENT at- I He REPUBUC OF INDONESIA On the upstreamside, geothermalexploltaV)fl ls Sgd characterized by large investments, high technology and DR. H.SUSILO BAMBANGYUDHOYONO great risk.Therefore, to prevent failure risks in the drilling of Geothermal Exploration, it is necessary for the Govern~ ment and the Regional Govemment to perform Prelimi- Enacted in Jakarta nary Surveys and/or to increaseExploration activities to On November5, 2007 datageothermal potentials asa consideration in the prepa- MINISTER OFLAW AND HUMAN RlGt-rrS ration and: stipulation of a Geothermal· Work: Area. OF1HE REPU6UC OF INDONESIA Phases of Geothermal Business activity consists of Preliminary Survey, Work Area Stipulationand Work Area Sgd Bid, Exploration, feasibility =ituCly, ExplOitation, and UUliLd- tion activities. These actiVities may be performed sepa- rately and/or integrated. However, all of these activities AND! MATTALATTA must be able to provide a certainty in the development of geothermal which for all this time, the main utilization is STAnrrEBOOKOFTHE REPUBliC OF INDONESIA. for electricpower, although it cannot be deniedthat gee- YEAR 1007 NO. 132 thermal can still be utilized for other purposes directly. Business NewsJ651j4-1S-200B Due to.... 31A Due to its uniqueness differingfrom naturaloil and Article 5 through Article 10 gasand other mining substances where its development is self-explanatory very flexible, geothermal shall possess an economic value only if the upper-stream side is utilized. Themfore, the Artide 11 arrana~ d the upper-stream side of geothermal btlc;i- Sub-artide (1) through Sub-article (3) 5eff-expjanatory ness in line with down-stream actMties related with its Sub-article (4) utilization shall be regulated separately or shall follow leg- What i!' meant by "related agency" are Govern- islationprovisions. ment departmentsand/or non-deparbnentinstitutions. ThisGovemment Regulation regulates geothermal Consultation is meant to provideclarifICations on borders, up-stream business activities, covering amongothers ar- coordinates, and plan of a certain Work Area deemed po- ranQl"!mentson the psrformanoa of activities in the exploi- Lentictllu umldh I 'geuUlennctl resources as a Work Area. tation of Geothennal Mining,. l.e. Preliminary Survey, Va- SUb--article (5) por Exploration and Exploitation, induelingnurturing and self-explanatory control', mechanism in the pl"Qparation of a Work Area, bid on Geothennal Work Area, Geothermal Mining Business Artide 12 activities (!UP), rights and obligations of IUP Holders, as sub-arnde (1) we" a~ data and jnformation. Data basic priceof a Work Area is classified based Toensure the performance of geothermal exploi- on the condition of region potentials, essence of Prelimi- nary Surveyand/orExploration data. tation so as to be able to achieve desired goals and tar- Sub--article (2) through Sub-artide (4) get&, the Govemment and the Regional Government mu5t 5eIf-exp(anatolY exerdse nurturing ancl cnntrol. In order to provide a legal basis for theopetatlons

Article 13 of gcot:herrnal exploitation activities which adopts the prin- self-explanatory dples of benefit,efficiency,justice, togetherness, optimi- Artide 14 zation of economy In the utilization of resources, SUb-article (1) Dchievobility, continuity, confidence lind reliDnce on own In the framework. at deve&oping under-developed- capability, secunlyand safety, preservation of livingenvi- regions, Explorations in such regions may be perfonned ronment func.tiOns and legal certaintyi it is necessary to be until data on proven reserves has been obtained. stipulated widt a Government Regulation. Sub-article (Z) Self-explanatory n. ARTIQ.E BY AR11Q.E Artide 15 through AJtide ~8 SeIf-exp&anatory Artidelthro'l'9hArt:ide3 SeIf~natory Artide19 What is meant by "Elecbidty Business Proxy" is an

Article 4 authority awarded by the Government to stat:e-owned busi- Sub-artide (1) nessentErprises assigned with a mission solelyto perform What ismeant by "service" is the seMce in dlarge business in the supply of eJectric power forpublic interest, of geothermalminingmatters. and provided with a mission to perfonnelectric power sup- SufHJrticle (2) porting business works. What is meant by "legislation pre- 5eIf-expianatory visions" is statutory regulations in the field of electricity. Business News 7651/4-18-2008 AItide20.... 32A

Article 20 Article 35 Sub-cuUde (1) lhrouyh SUb-drUc.!e (5) Sub-orticle(1) 5eIf-explanatory What is meant by "force majeure" among others Sub-article (6} arewar, evil disturbances, rebellion, epidemic, earthquake, Letter a flood, fire and other natural catastrophe ~ human What is meant by "related agency" are Govern- capabilities. ment departments and/or non-departmentinstitutiOns. What is meant by "barring situation" among oth- Letter b and Letter c ers are blockades, strikes, labor conflicts not due to the self-explanatory fault of IUPHolders, aneVcr legislations issued by the Gov- ernment Obstructing mining businessactivitiesthat are in Artide21 progress. self-expfanatory sub-ernde (2) What is meant by "shall not decrease IUPvalkJity

Article 22 term" is that the temporary cessation of IUP is not ac- Sub-artide (1) through Sub-article (3) counted for in the IlJP validity period. 5eIf-explanatoJY Sub·articIe (3) through Sub-artide (6) Sub-article (4) Setf-.explanatory Lettera Funding ability among others is in the fonn of a

Article 36 and Article 37 submission of an audited finandal statement of the latest 5etf--explanatory year.

Article 38 Letterb Sub-article (1) P\acement of bid guaranty is a requirementfor This provision is meant to enable the Minister, business enterprises as proof of l:t\@ seriOU'l'rte"-c:. t:i thP.. governor, and regent/mayor tn accorclance with his au- business enterprise concemed to foftow the Work Area thority respectively, to appoint other businesseaterpnses Bid. by tendering a WorK Area to exploit a part of a WorkArea Sub-article(5) granted to e IUf' Holder, ~ the utilization of geother- setf-eplaMtory mal.resources can be executedQPtimc1/1y. Sub-article(2)

Article 23~Amde 31 SP.ff..ecplanatory 5eIf'~ Artlde 39 ArtJde32 Sub-artiCle (1) sutrarl!ide (l}and SUHrtide(2) What is meant-by commercial production in this ~ provision is the production which 0)1'1JfMeI'_.yieIds profit SUb-aTtide (3) to the state and the business enterjJrfge. ConSideflng that geotttermal exploltaUurt·t\as is Sub-article (2) pamculard1aracterlstIc, i.e. qreaUtwestment,htgh tech- Self-explanatory nology and I!!Idsting inremoteereas, IUP -Holders areas· surec to yet on extension of Cxplomtkm periOd tit n-1eeb> Allicte40 technical, econom;c and envfronmental f1!QlIirement5. Sub-article (1) This provisiOn is meant so that geothermalfields deem~ to be not economical (marginal) by tup Holders, can be utttized optimally. Business News 7651/+18-1008 Sub-art:ide (2) __ .. 33A Sub-article (2) and Sub-article (3) Article 50 Self-explanatol)' Self-explanatory

Article 41 through Article 44 Article 51 Self-explanatory What is meant by "common standard" isIndone- sia National Standarri

Article 45 Lettera throughLetterf

Article 52 Self-explanatory Self-explanatory Leuery What is meant by "legislation provisions" in this

Article 53 Government Regulation arestatutory regulations concern- Sub-article (1) ina g~rmal. Lettera Self-explanatory

Article 46 Self-explanatory Number! 5e1f-explanatory Artide47 Number 2 Sub-article (1) The development of a geothermal field is per- Lel.l.t:f d Ullough teuer ( formed if a Feasibility Stulily had been conducted and had self-explanatory meteconomy aspect andthe availability of markets. Letterd Number 3 throughNumber 6 Buildings lJc;ahl~ for publir'interest, among others 5elf-eYplanarory are air fields, hospitals, and roads. Letter b through Letter h Lettere self-explanatory Self-explanatory SUb-article (2) Sub-article (2) through Sub-article (4) self-explanatory Self-explanatory

Article 54 throughArt",cle 57 Artlde48 Self-explanatory Sub-article (1) 5e1f--explanatory

Article 58 c;ub-artidp (1) Sub-article (1) letter a through letter d The submission of the long term planof Explora- Self-explanatory tion activities providing information in nature, is meant to Lettere align il willl the lOlly term development plan oflht: Gov- Extension of IUP term is given to ensurethe cer- tainty of business and the optimizing of geothermal re- ernmentor Regional GovernDlent, including inventorying sources utilization after a business enterprise meets the the amountof investments. The submission of the activity feasibility ofteehniCal, econorrucat and envlronmental re- plan is not meantto obtain an approval of the Government qUirements. or Regional Government. Sub-article (2) Artide49 self-explanatOl)' Whatis meantby "continuously" isthat the activi- ties are performed consecutively from the Exploration Article 59 through Article 61 phase, Feasibility Studyphase, and Exploration phase. Self-explanatory BlIsiness News7651/4-18-2008 ArticJe62.... 34A Artide62 Sub-article (4) Sub-artide (1) and Sub-artide (2) self-explanatory ~r"'t:XPlanatory Artide64 SUb-artide (3) self-explanatory The placement of allocated fund shall bEi dej)OS- !ted in a government bank in the name of the IUPIssuer Artide65 attn. the IUP HoJder. Sub-artide (1) Sub-artide(4) In prioritizing the use of domestic goodsand ser- self-explanatory vices, it should still consider requirements on teChnical, Quality, timelydeliVery, competitive price and guaranty on

Article 63 atter-sales services aspects. Sub--artide (1) Sub-article (i) and Sub-article (3) Setf-explanatory Self-explanattxy Sub-article (2) L..etIer a Article 66 Self-explanatory Sub-artide(1) Letterb The local community development and empower- What is meant by "other conbibutions on excise", mentproorams isperformed by IUP Holders to aSSiSt GOv- e.g.duty stamp. ernment program inenhandng the prdductivity ofthecom- What ismeant by "other contnbutlons on import"; e.g.value munity, and the people's socio-economy capability through added tax on lUXUrious goods. the empowerment of regional potentials continuously.. Sub-artide(2) L..etterc Self-explanatory self-explanatory Sub--artide (3)

Article 67 L..ettera self-explanatory What is meant by "constant contribution", are c0n- tributions paid to the State ascompensation of the oppor-

Article 68 tunity for ExpJoration, Feasibility Study and ExplOranon in a Sub-artide(1) Work Area. self-explanatory What is meant by "production contribution", are Sub-article (2) conbibutions pojd to the State on yields 9f1ined from Ge0- The objective of data management andutifization thermal Mining business. is to supportthe Stipulation of a Work Area; formulation of What is meant by "otherState contributions", e.g. technical policies, operations of Government affairs; and education and training c;ervice<;., and research and devel- supervision In the fielCl Of E.>€p!oratlOn andExpk)ltatlOnl ex- opmentservices. ecution of Exploration and Exploitation, and scx:lalization of Lelterb data to users eswell asexchange of data. What is meant by "bonus" in this provision is the Artick; 69 , price of data of the Work Area. ( To be continued ) -===( D )===- 9lIsiness News7651/+18-2008 9A GEOTHERMAL BUSINESS ACTIVITY (Government Regulation No. 59 Year 2007 dated November 5, 2007) [Continued from Business Npwc;; No. 7651 pages 21A-32A] Artide 69 through Article 75 self-explanatory Artide76 Sub-artk:1e (1) self-explanatory Sub-artide (2) Policy is a statementof the principle usedas basis in the arrangement to achieve targets of Geothermal Mining business operations. Guidance is a gen@ral I"@f'prPnrp to be further broken down. and may be conformed to the characteristics and capability of the local arearelated to Geothermal Mining business operations. Nurturance is exercised on the compilation of procedures and mechanisms of the performance of Geothermal Mining busmess uperatiol1s. Directing is exercised on the fonnulation of plans, programs, and actiVities/projects having a nation-wide and regional naturein accordance with its periodicity. Supervision is performed on the performance OfGeOthermal Mining business operauons, Training is condocted for the purpose d enhancing the quality of human resources in the form of education andtraining. Sub-artide(3) self-explanatory Artide n through Article 84 self-explanatory Artide85 What is meant by Proxy and Geothermal Exploitation Permit for Electric Power Generator and Geothermal Exploitation-Contract and/or Vaporor Electric Power Purdlase Contract in a Work. Area, is the ProXy, Permit, Vapor or Electric Power Exploitation and/or "'urthase COntract Inall areas c1won:Ied- by the Government to PT. Pertamina (Persero) or PT. Pertamina (Persero) oooperating with JointOperation Contract Contractors, or the ProXy awarded bythe Govern- ment to PT. PLN (Persero) or to Private Enterprises for the development of energy/electricity or Pennit on Small scale Geothermal Development to Cooperatives, -===(D)===-- Business News7652~ 7653/4-23-2008