DEPOK (eNBe Indonesia) - Early retirement of coal-fired power plants in Java Island as part of energy transition program and global appetite in clean energy might have contributed to substantial gain in shares of Pertamina Geothermal Energy (PGEO), the largest in Indonesia.
The stock went up to Rp1,345 on Wednesday (Sept 6) before closing lower by 0.4% to Rp1,285 to make a market capitalization of Rp53.2 trillion.
Still, PGEO has gained 47% from its IPO price (Rp875) in late February 2023. PGEO is now substantially higher than sister gas trading and distribution company PGAS, which has market capitalization of Rp33.3 trillion.
Unlike PGEO, PGAS has fallen 20.4% so far this year, along with the lower oil and gas prices.
Then, PGAS’ profit dropped 39% year on year (y/y) to US$145.3 million for the first half (H1) of 2023.
Actually PGAS’ revenues was flat at US$1.78 billion in said period, but higher costs dragged its profit down.
On the other hand, PGEO booked profit attributable to owners of US$92.8 million in H1 of 2023, grew 31% y/y, as revenue rose 12% y/y to US$206.7 million.
That said, the launching of carbon exchange in Indonesia boosted buying sentiment for PGEO.
Also, PGEO recently developed a collaboration with two African companies. President Joko Widodo (Jokowi) has made working visits to several countries on the African Continent–Kenya, Tanzania, Mozambique, and South Africa.
And PGEO had signed two commitments with Africa Geothermal International Limited (AGIL) and the National Oil Corporation of Kenya (NOCK).
Apart from, PGEO is completing several geothermal power lant (PLTP) projects–the PLTP in Seulawah Agam, Aceh Besar and the PLTP project in Hululais, Bengkulu.
PGEO also targets the installed capacity of PLTP in the next five years to increase by 600 Mega Watt (MW). And PGEO allocated US$1.6 billion, equivalent to Rp24.52 trillion for funding this projects.
PGEO said it has received a loan of around US$700 million, equivalent to Rp10.67 trillion from the Japan International Cooperation Agency (JICA), securing said loan facility at the Asean Indo-Pacific Forum in Jakarta on Tuesday (September 5).
Said loan is allocated for the construction of the Lumut Balai Unit 2 Geothermal Power Plant (PLTP) with installed capacity of 55 MW, part of PGEO’s plan to increase the installed capacity of the company’s power plant to the level of 1 gigawatt (GW) in the next 2 years.
PGEO said other potential additional power comes from Hululais Units 1 and 2 (110 MW), Hululais Binary Unit (60 MW), Ulubelu (40 MW), Lahendong (35 MW).
Recently, PGEO secured a strategic partnership with PT Pembangunan Aceh (PEMA) for the development of a geothermal working area in Seulawah, Aceh.
In addition, PGEO said there is still a potential of 340 MW of potential electricity that can be developed to be utilized into the current installed capacity at the level of 672 MW.
PGEO currently manages 13 geothermal working areas with an installed capacity of more than 1.8 GW. A total of 672 MW is operated and managed directly by PGEO and 1,205 MW is managed under a joint operation contract scheme.
Noting that, geothermal energy is one of Indonesia’s major potential energy sources, with the country’s potential geothermal reserves amounting to 23,965.5 megawatts (MW), the second-largest in the world.
Currently, only 9.8% of Indonesia’s geothermal energy potential has been utilized to produce an installed power generation capacity of 2,342.63 MW from 15 working areas.
Potential geothermal energy is one of the energy sources investors are taking notice of amid the current energy transition era.
High pollution in major cities in the populated island of Java might force the government to implement faster early retirement of some old coal-fired power plants. The question, of course, how fast PGEO will develop the geothermal projects in Java and Sumatra?***