PGEO IPO: Unleashing Geothermal Energy Prospects
PT Pertamina Geothermal Energy Tbk (PGEO) listed its initial shares on the Indonesia Stock Exchange (IDX) on Friday (2/24). The Pertamina subsidiary will become the 19th issuer on the IDX in 2023, and its shares are listed on the main board. As the company went public, PGEO released 10.35 billion new shares or 25% at Rp875 per share and obtained Rp9.05 trillion in funds. The company’s President Director, Ahmad Yuniarto, successfully attracted domestic and multinational companies to participate as an investor in this IPO, namely Indonesia Investment Authority (INA) and Masdar, a clean energy company headquartered in the United Arab Emirates (UAE). As one of the largest geothermal developers, the prosperous IPO planned to contribute to Indonesia’s new renewable energy. The Director of PT Pertamina Nicke Widyawati conveyed that the proceeds from the IPO would be sufficient ammunition for Pertamina Geothermal Energy to increase its capacity; thus, it could boost the contribution of geothermal energy deposits. Furthermore, AVP Equity Research at Mandiri Sekuritas, Henry Tedja, mentioned to CNBC on Wednesday (3/1) that with PGE's ambition to increase electricity capacity by 600 MW, the potential for developing this resource is enormous. Reflecting on PGE’s positive free cash flow, funding through the IPO can accelerate the development of geothermal power plant capacity and help achieve the Net Zero Emission target.
As a subsidiary of the state-owned oil and gas company, Pertamina, PGEO plays a significant role in developing new renewable energy (EBT) and has been actively involved in developing and utilizing geothermal energy resources in Indonesia. The company's efforts have contributed to the growth of Indonesia's renewable energy sector, which is crucial for the country's sustainable development. Indonesia has tremendous geothermal potential, with an estimated resource potential of over 28,000 MW. However, geothermal energy utilization has been slow due to various challenges, including high exploration and development costs, regulatory and land acquisition issues, and inadequate infrastructure. PGEO has been working to overcome these challenges through its geothermal exploration and development projects across Indonesia. The company has been expanding its geothermal portfolio in recent years with new projects in Sulawesi, Java, and Bali. PGEO's efforts have been recognized by various stakeholders, including the government, international organizations, and the private sector. In 2020, the company was awarded the Geothermal Project of the Year at the Asian Power Awards for its Sorik Marapi project in North Sumatra. The project is expected to add 240 MW to the country's geothermal capacity and reduce greenhouse gas emissions by 1.3 million tons annually.
PGEO currently possesses 13 geothermal working areas, with 9 being revenue-generating operations. The company intends to increase its installed capacity by 600 MW over the next five years, hitting 2,477 MW. Following the ongoing IPO, PGEO ought to optimize Indonesia's geothermal potential beyond electricity supply purposes, one of which is transforming it into biohydrogen for eco-responsible fuels. The company is developing a pilot project for biohydrogen with a production target of up to 100 kg/day. To attain this goal, PGEO will take partnership with Tepco HD in combining its geothermal power plant with the Japanese electric utility holding company’s hydrogen production technology. This partnership will also support the development of the New Energy and Industrial Technology Development Organization (NEDO). Chief Executive Officer of Pertamina NRE said that with the company’s potential and collaboration with TEPCO, it is convinced that it can produce green hydrogen and contribute to reducing carbon emissions. PGEO has the vision to become a world-class green energy company with the most extensive geothermal capacity in the world, supported by three strategic pillars: optimizing existing areas of operation, expanding geothermal value chains, and developing new geothermal regions. In conclusion, with the funding obtained from the public offering, Indonesia’s enormous geothermal potential, and the aim to strengthen energy transition, PGEO is able to achieve these targets in the following five years.
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