PGEO - To find green financing of IDR23 tn

PGEO - To find green financing of IDR23 tn Aiming to strengthen geothermal's production capacity of 350 MWh in the couple of years, Pertamina Geothermal Energy (PGEO) is striving to have green financing by issuing ESG-based loan (green loan) of IDR15.3 tn as well as green bond of USD500 mn or equivalent of IDR7.6 tn. The company possess an ambilition to be the biggest geothermal operator in Indonesia and the second biggest in Asia with 1 GWh capacity. It currently has 672 MWh installed capacities. That being said, it should have 340 MWh additional capacity (110 MWh in Hululais area and 55 MWh in Lumut Balai in the following two years. The initiative is allegedly related to PGEO's plan to acquire geothermal power plant of Sorik Marapi Geothermal (SMGP) worth of USD1 bn transaction value. SMGP is the biggest greenfield geothermal in Indonesia, which is located in Mandailing Natal - North Sumatera, with potential geothermal of 240 MWh. It also supplies 15 MWh electricity to PLN (3x80 MWh geothermal PPA since 2014) through 150 kV transmission line. (Source : Investor Daily) Comment: We view that the it will strengthen its market position both in domestic and Asia. However, it should increase its capex as well as financial leverage going forward.