Pertamina is the second Indonesian state-owned energy firm to unveil its plan to issue a sustainable finance instrument after the state electricity firm (PLN), respectively the fourth and first largest state-owned enterprise by assets.

Finance director Emma Sri Martini said Thursday that the bonds would help expand Pertamina’s green energy business to contribute between 10 percent and 15 percent of to total revenue within five years, compared to the current figure of under 5 percent.

“We realize 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,” Emma said at a webinar hosted by sustainable finance nonprofit Climate Bonds Initiative (CBI).

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She also noted that Pertamina’s bonds could be issued through its geothermal subsidiary, PT Pertamina Geothermal Energy (PGE), and that Manulife Investment Management was a potential bondholder. Emma added the company might also issue bonds to develop its green capacities, including solar.

Data compiled by CBI shows that Southeast Asian companies had raised $3.09 billion for geothermal projects through green bonds between 2016 and 2020. Of the total funds, Filipino companies raised 45.2 percent and the remaining 54.8 percent by Indonesia’s Star Energy Geothermal.

The green bonds are 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 [geothermal project] investments via green bonds or traditional funding. Global investors are telling us they are very keen on new opportunities in clean energy," CBI chief executive Sean Kidney told The Jakarta Post on Thursday. 

Through subsidiary PT Pertamina Power Indonesia, the oil and gas giant currently operates 4,146 megawatts (MW) of power plants, of which 57 percent are geothermal power plants. The company has plans to ramp up its solar capacity and to enter the electric vehicle battery industry.

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Pertamina plans to operate 10,000 MW of green power plants by 2026 in line with its commitment to the 2025 national energy mix target of 23 percent. Indonesia’s renewable energy share reached 11.51 percent in 2020.

Meanwhile, PLN is working with the Asian Development Bank (ADB) to issue sustainable bonds this year.

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