Medco Power is considering a 2016 IPO to raise needed financing for its development program that includes up to 440 MW at its Sarula project in North Sumatra and Ijen project in East Java.
Indonesian electricity company Medco Power plans to undergo an initial public offering by 2016 listing its shares on the Indonesia Stock Exchange.
The company seeks to raise financing for its planned expansion and sees the IPO as one of the simplest and easiest ways to raise the necessary capital to fund its investment plans.
The company is currently valued at around $300 million but expects to raise its value to $500 million by its planned IPO in 2016.
The company has allocated some $500 million either for acquisition or building power plants. Medco Power is currently building several power plants, among them mini-hydro power plant, a gas-fired power plant and the Sarula geothermal power plant in North Sumatra with three 110 MW generators, planned to be the largest of its kind in the world.
“However, construction of the geothermal facility has been delayed as there was no agreement with Pertamina Geothermal Entergy, a subsidiary of energy company Pertamina that owns the geothermal working area.
“Medco Power has requested for a tax break from the government as the assets are state-owned,” said the company’s president director Fazil E. Alfitri, adding that the company has also contributed to infrastructure development in the region.
The complication is due to an old regulation stating that all geothermal assets be owned by Pertamina.
“Though the new geothermal regulation has addressed the problem, the development of the Sarula power plant is based on old ones,” Fazil said.
Medco Power owns a 37 percent stake in the $1.5 billion project, while two Japanese companies Itochu and Kyushu Electric, control 25 percent each and US-based Ormat Technologies, owns the remaining 13 percent.
Most of the funding, Fazil said, came from the Japan Bank for International Cooperation, a state-controlled institution that provides loans for the private sector.
The other Medco geothermal project, the Ijen Geothermal Power Plant in East Java with two 55 MW generators, has no such problems as the project is tied in with the new regulation, said Fazil.
Construction on the project, estimated at around $300 million, will start as soon as possible, he said, without giving a specific timeframe.”
Source: The Jakarta Post