'Fossil fuels face sunset, like it or not': Indonesia's state oil group targets renewables
Pertamina looks to issue first green bonds within 12 months, with geothermal and solar central to energy transition ambitions
Indonesia’s national oil and gas company is planning to issue its maiden green bonds within a year as it moves to secure funds to hit a 10GW renewables target, with geothermal developments high on its agenda.
Pertamina finance director Emma Sri Martini said the bonds would help expand the group's green energy business to contribute between 10% and 15% of its total revenue within five years, compared to the current figure of less than 5%.
In addition to the proposed green bonds, subsidiary Pertamina Geothermal Energy has plans for an initial public offering and there is a potential for a merger of the three Indonesian state-owned geothermal players.
“We see an opportunity to be able to participate in this green bond issuance. Maybe not for this year. But for the next year, especially for funding the geothermal projects we are developing, it is very suitable for green bonds,” the Pertamina finance chief said.
Sunset for fossil fuels
One potential bondholder is said to be Manulife Investment Management.
Pertamina is the second Indonesian state-owned energy company to unveil its plans to issue a sustainable finance instrument after national electricity company Perusahaan Listrik Negara, which is working with the Asian Development Bank to issue sustainable bonds later this year.
Data compiled by CBI show that Southeast Asian companies have raised $3.1bn for geothermal projects through green bonds between 2016 and 2020.
The lion’s share was raised by Indonesia’s Star Energy Geothermal, while companies in the Philippines also availed themselves of these financial instruments.
The green bonds were mostly denominated in US dollars, with issue sizes ranging between $60m and $790m.
Solar also on the radar
Pertamina is aiming to operate 10GW of renewable energy power projects by 2026.
The company currently operates 4.1GW of power plants, of which almost 60% are geothermal projects. It also has its eye on solar energy projects and battery storage.
Indonesia is aiming to boost to 23% the share of green energy in its primary energy mix by the middle of this decade, up from 11.5% last year.
Climate Bonds Initiative is an international organisation, which says it is “working solely to mobilise the largest capital market of all, the $100 trillion bond market, for climate change solutions”
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