Indonesia’s national oil and gas company is planning to issue its maiden green bonds within 12 months as it moves to secure funds to progress its renewable energy projects, in particular geothermal developments.
Pertamina finance director Emma Sri Martini said the bonds would help expand Pertamina’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 planned green bonds, subsidiary Pertamina Geothermal Energy has plans for its initial public offering plus there is the 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,” Emma said in a webinar last week.
Sunset for fossil fuels
“We realise that the sunset for fossil fuels will happen in 30 to 40 years down the road. Like it or not, we have to prepare to enter the energy transition period,” she told a webinar hosted by non-governmental organisation Climate Bonds Initiative (CBI), The Jakarta Post reported.
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 $3.09 billion 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 $60 million and $790 million.
“We are excited to hear that Pertamina will be specifically seeking funding for investments via green bonds... global investors are telling us they are very keen on new opportunities in clean energy," CBI chief executive Sean Kidney told The Jakarta Post.
Solar also on the radar
Pertamina is aiming to operate 10,000 megawatts of renewable energy power projects by 2026.
The company currently operates 4.146 gigawatts 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”.