Welcoming Geothermal Development Bright Prospects, PGE Has Strong Financial Fundamentals
Jakarta, March 21, 2023 - PT Pertamina Geothermal Energy Tbk (PGE) is ready to welcome a bright New and Renewable Energy (NRE) project development. The potential for this business is huge, as Indonesia has abundant resources.
Based on data from the Ministry of Energy and Mineral Resources, geothermal potential in Indonesia reaches 23.7 GW. With a geothermal power plant (PLTP) capacity of 2,276 MW, geothermal utilization in Indonesia also ranks second after the United States (US).
Deputy Chairman of Commission VII DPR RI from Partai Amanat Nasional (PAN), Fraction Eddy Soeparno, is optimistic that PT Pertamina's business unit can grow in the geothermal industry.
"I believe PGE's business prospects are quite good even though they are high risk and high capital, but the prospects for the NRE business in the future are high, and investor interest is high as well. Thus, the prospects are bright," he said on Friday (17/3).
Eddy Soeparno admitted that the PLTP project worked on by PGE does require large capital. The total investment that the company is preparing is USD 1.6 billion in the next five years or until 2027. This value is equivalent to IDR 24.2 trillion (exchange rate of IDR 15,133 per US dollar).
Therefore, the company's decision to enter the stock exchange alias Initial Public Offering (IPO) recently was the right decision. It is because this issuer with the PGEO code earned huge funds of around IDR 9 trillion in February 2023.
"With this IPO, most of the project's initial capital can be implemented. It is just a matter of how PGE and partners can run it, both national [partners] and foreign private companies. Seeing the high interest in NRE, I do not think PGE will have any difficulties getting partners. Hence, banks will be interested in financing PGE projects in the future," said Eddy Soeparno.
Strong Financial Fundamentals
Meanwhile, Corporate Secretary of PGE, Muhammad Baron, explained that as one of the largest geothermal energy developers in the world, PGE has decades of experience with the ambition to increase electricity capacity by 600 MW in the next five years.
Funds obtained from the IPO are allocated for business development by 85 percent, and the 15 percent will be utilized to pay part of the debt. Therefore, according to him, the company's financial fundamentals are strong to carry out the NRE electricity development project.
"Funding from the capital market through an IPO is expected to support the accelerated development of geothermal power plant capacity," said Muhammad Baron.
One of the things that have been done is the plan to add a geothermal installed capacity of 55 MW in one of PGE's operating areas in Lumut Balai, South Sumatera, targeted to be completed in 2024.
As of September 2022, PGEO had a cash and cash equivalent value of USD 230 million, an increase of around USD 105 million from the cash balance as of December 31, 2021. It shows that PGEO can manage cash well, which is mainly obtained from the steam sale and electricity to PLN.
PGEO's steam and electricity sales contract is a long-term contract and is always paid on time. "With the additional IPO fresh funds, PGEO still has a fairly strong cash flow and can fulfill debt repayments on time," said Baron.**