Ministry mulls spinning off Pertamina’s geothermal assets
The Energy and Mineral Resources Ministry is considering making the Pertamina subsidiary that runs the geothermal business a separate entity so that the government will be able to exert direct control over its expansion.
The ministry’s director general for new, renewable energy and energy conservation, Rida Mulyana, said separating Pertamina Geothermal Energy (PGE) from the parent company would enable the government to inject funds for expansion.
“We are thinking of how to accelerate development of geothermal projects. PGE already has the capacity and geothermal working areas. However, its expansion still depends on the parent firm and the government currently cannot inject any funds directly,” Rida said.
He added that two options were now on the table for PGE, either making it a fully owned state enterprise or restructure it to be a special public service agency.
The plan to establish a state-owned enterprise dedicated to geothermal development has been filed with the President, who also threw his weight behind the plan in his remarks at the opening ceremony of the new and renewable energy convention, EBTK Conex and the Indonesia International Geothermal Convention and Exhibition.
Energy and Mineral Resources Minister Sudirman Said revealed that high-level talks involving several ministries have been taking place to discuss a possible state-owned enterprise dedicated to geothermal development.
“However, we need a thorough assessment. As long as we only have a subsidiary of a state-owned enterprise to run the geothermal business, we won’t pay full attention,” Sudirman said.
The country currently has one state-owned enterprise in the geothermal sector, called Geodipa. However, the company is currently embroiled in a legal case, which hinders the government from interfering in the process.
Thanks to its geographical location in the Pacific Ring of Fire, Indonesia is estimated to have abundant geothermal resources, which can be processed to generate electricity. However, tapping the heat of the planet’s magma for power is not an easy task, particularly because of the massive investment and the high-end technical capability needed, as well as the environmental issues.
Out of the estimated around 28 gigawatts (GW) of geothermal potential in Indonesia, only 1,403 megawatts (MW), around 5 percent, have been utilized to generate electricity.
Out of the total, PGE currently has 437 in total installed capacity of geothermal power plants.
PGE president director Irfan Zainuddin said the government’s plan to make his company a separate entity remained unclear.
“PGE is already a state-owned firm as it is a subsidiary of Pertamina, which is fully owned by the government. We still don’t know whether the government will keep PGE like it is now, a [geothermal power] producer, and make profits,” Irfan said.
He added that PGE was currently undergoing a massive expansion to achieve the target of having higher installed capacity. The company is aiming to produce 682 MW in capacity by 2017, which will make it the biggest geothermal power generator in Indonesia. In a long term plan, it aims to have 2.3 GW in installed capacity by 2025.
The company estimates that it will have to invest US$2.5 billion over a five-year period to achieve the target. “We have no problem in financing as all is in place,” Irfan said, responding on the government’s plan to inject capital to support the company’s growth.