Indonesian Energy and Mineral Resources Ministry has set aside Rp350bn ($39m) to mitigate risks for the development of geothermal projects in 2011.
Indonesian Minister Darwin Zahedy Saleh told the Jakarta Post that the compensation was needed for encouraging investments for development of the geothermal power plants in the country.
The country has 40% of the world's geothermal reserves, however, its development has not met expectations, according to Saleh.
To date, the country has produced only 1,189MW or 4% of the total potential, the minister said.
Apart from fund for mitigation of risks, the Indonesian Government has also ordered state-owned electricity company PLN to buy power from geothermal producers at a ceiling price of 10 US cents to end uncertainties over pricing.