First Gen allots $80 million for Indonesia expansion

MANILA, Philippines — Lopez-led First Gen Corp. is fueling its geothermal expansion in Indonesia with a planned initial investment of up to $80 million.

First Gen president and COO Francis Giles Puno said an initial capital of around $30 million would be set aside to balance the contribution of its joint venture partner, PT DSSR Daya Mas Sakti.

“Then after that, we will have to enter into the drilling campaign. Another $30 million to $50 million (will be invested) for the drilling alone,” Puno said in an interview.

This follows the signing of a strategic deal between First Gen unit Energy Development Corp. (EDC) and DSSR to unlock around 440 megawatts (MW) of geothermal potential in Indonesia.

DSSR is a subsidiary of Jakarta-based PT Dian Swastatika Sentosa, which is part of the Sinar Mas Group, one of Indonesia’s largest and most diversified conglomerates.

“So we’re putting our concessions in Indonesia into the pot, and they’re doing the same with theirs. That way, we can jointly develop a much larger area. It’s important in Indonesia to have a good local partner,” Puno said.

With First Gen’s 50:50 joint venture with the Sinar Mas Group, Puno expects a “very formidable partnership” in developing geothermal resources in Indonesia.

EDC chief finance officer Erwin Avante said the parties are initially exploring a portfolio of six geothermal projects.

“Pre-development and drilling schedules will be phased and after we do resource assessment, but you can assume $20 million to $50 million per drilling campaign for the projects we decide to advance,” Avante said in a Viber message yesterday.

Indonesia is the world’s second-largest geothermal producer, accounting for around 40 percent of the total global geothermal reserves.

The country sits on a geothermal potential of around 24 gigawatts, of which only 10 percent has been developed.

“If a company like First Gen can help Sinar Mas and the Indonesian government to develop more renewable energy sources that are cost-competitive, then that’s a good start as far as enlarging the RE footprint in a country like Indonesia,” Puno said.

Beyond Indonesia, Puno said the First Gen Group is actively exploring geothermal opportunities in other countries.

In the Philippines, First Gen, through EDC, operates at least 13 geothermal power plants with a combined capacity of 1,200 MW. This is the largest portfolio of its kind in the country.