Geothermal Exploitation Costs Surge! MoFor Regulation 28/2025 Sets Levy Rates in Conservation Areas

Introduction

On 22 December 2025, the Minister of Forestry issued Minister of Forestry Regulation Number 28 of 2025 on the Amounts of Value A, Value B1, Value B2, and Value B3 for Non-Tax State Revenue Levies on Business Licensing Activities for the Utilization of Geothermal Environmental Services at the Exploitation and Utilization Stages within Conservation Areas (“MoFor Regulation 28/2025”), which took effect on 31 December 2025. This regulation aims to provide legal certainty regarding the base figures used to calculate state levies for geothermal businesses.

The Government recognizes the urgency of optimizing Non-Tax State Revenue (“PNBP”) derived from the risk of environmental damage arising from geothermal exploitation activities. MoFor Regulation 28/2025 implements the mandate of Article 4 (3) of Government Regulation Number 36 of 2024 on the Types and Tariffs of Non-Tax State Revenue Applicable to the Ministry of Environment and Forestry. Through this regulation, the Government seeks to balance the economic interests of geothermal energy utilization with obligations for restoration or compensation for environmental impacts occurring within conservation areas.

 

Key Provisions

Scope and Object of the Levy

MoFor Regulation 28/2025 affirms that levies on Business Licensing Activities for the Utilization of Geothermal Environmental Services (“PB-PJLPB”) constitute a type of PNBP imposed in relation to the risk of environmental damage. Article 2 stipulates that this levy applies to exploitation and utilization activities located within three types of conservation areas, namely:

1. National Parks (Taman Nasional/TN);
2. Nature Tourism Parks (Taman Wisata Alam/TWA); and
3. Grand Forest Parks (Taman Hutan Raya/Tahura).

Variable Components for Tariff Calculation

The Minister of Forestry determines four basic value components that serve as multiplier variables in calculating the levy tariff per hectare per year. As detailed in the Annex to the regulation, these values include:

1. Value A (Biodiversity): IDR 9,600,000.00 (nine million six hundred thousand rupiah) per hectare per year;
2. Value B1 (Water Regulation): IDR 106,000.00 (one hundred six thousand rupiah) per hectare per year;
3. Value B2 (Carbon Sequestration Loss): IDR 320,000.00 (three hundred twenty thousand rupiah) per hectare per year; and
4. Value B3 (Carbon Emissions): IDR 320,000.00 (three hundred twenty thousand rupiah) per hectare per year.

Annual Tariff Calculation Mechanism

MoFor Regulation 28/2025 differentiates the tariff calculation formula for the first year from that of subsequent years. Pursuant to Article 3 (3), the tariff calculation for the first year must take into account all variables (Value A, Value B1, Value B2, and Value B3) multiplied by the Area Size (L), as it includes the initial carbon emission component (Value B3).

The levy tariff on PB-PJLPB activities at the exploitation and utilization stage for the first year shall be calculated as: (L × A) + (L × B1) + (L × B2) + (L × B3).

However, for tariff calculations in the second year and thereafter, Article 3 (4) provides that the calculation uses only the sum of the multiplication of the Area Size (L) by Value A, Value B1, and Value B2, without including Value B3. This levy must be paid by the license holder once every year.

The levy tariff on PB-PJLPB activities at the exploitation and utilization stage for the second year and subsequent years shall be calculated as: (L × A) + (L × B1) + (L × B2).

 

Transitional Provisions

Article 5 stipulates that PB-PJLPB licenses at the exploitation and utilization stages issued prior to 31 December 2025 remain subject to the obligation to pay PNBP in accordance with the new tariffs. All businesses holding existing licenses are required to adjust their annual levy payments (whether for the first year, second year, or subsequent years) in accordance with the formula and value amounts established under MoFor Regulation 28/2025.

 

Closing

MoFor Regulation 28/2025 introduces financial consequences for geothermal businesses operating within National Parks, Nature Tourism Parks, and Grand Forest Parks. The greatest cost burden arises from the Value A (Biodiversity) component, which amounts to IDR 9.6 million per hectare per year. Businesses may promptly recalculate their annual PNBP obligations using this new formula, as the transitional provisions require licenses issued prior to 31 December 2025 to remain subject to and comply with the levy tariffs stipulated under MoFor Regulation 28/2025.