Jakarta, February 24, 2023 – PT Pertamina Geothermal Energy Tbk (PGE) is ready to hold an initial public offering (IPO) worth Rp9.8 trillion on the Indonesia Stock Exchange on Friday (24/2/2023). With these funds, PGE will develop a geothermal power plant (PLTP) with a capacity of 600 megawatts until 2027. Responding to this, the Executive Director of the Institute for Essential Services Reform (IESR), Fabby Tumiwa, explained two urgencies in the IPO process for PGE shares. First, Indonesia’s target is to develop renewable energy and make an energy transition. Therefore, Indonesia needs to take advantage of all its renewable energy sources. Moreover, Indonesia also needs to gradually reduce the operation of coal-fired power plants until 2050.
“The second urgency is that PGE has a business strategy, and this company will transform from an oil and gas company to an energy company. One of them will be encouraged by the development of renewable energy, such as geothermal,” explained Fabby.
Fabby said that Pertamina has large geothermal reserves, and the quality of the resources is quite good because Pertamina has been exploring since the 1980s. Thus, Fabby assessed that it could not be developed optimally due to several factors. One of the factors is funding. Bearing in mind the development of geothermal resources requires a sizable investment because they have to carry out exploration (drilling) and ascertain what percentage of these reserves can be used for electricity operations.
“In Indonesia, the cost of drilling just one well requires funds of around USD 3-5 million. With a success rate of 30% and when we drill three wells, we can get one well that is successful at generating around 30-50 megawatts (MW) of electricity, and we have to spend USD 15 million for the drilling. It envolves infrastructure and so on. This process takes a long time from drilling to turning it into a power plant,” said Fabby.
Fabby mentioned that Pertamina needs to optimize the potential of existing geothermal reserves. For that, Pertamina needs funds. One way to get these funds is through an IPO of shares. The IPO is the right step for Pertamina’s future development.
“Indonesia has the largest geothermal potential in the world, a total of around 28 gigawatts (GW) or 28 thousand megawatts (MW), of which less than 10% has been utilized until today. If we can develop this, it is hoped that renewable energy will be more competitive, especially electricity from geothermal, which can be cheaper,” stated Fabby.