PGE IPO Is Not The Right Step

Photo: Doc. Antara

JAKARTA - PT Pertamina's (Persero) move to go public with PT Pertamina Geothermal Energy Tbk (PGEO) is considered not the right step.

Executive Director of Energy Watch Daymas Arangga Radiandra said the geothermal business, which is the core business of PGEO, is a long-term business, and should also be financed with a long-term financing scheme. However, he explained, Pertamina actually took the risk of carrying out a short-term financing scheme (short term financing) through an IPO.

Investasi itu penting, tapi harus dilakukan dengan hati-hati karena ada cerita masa lalu, katanya kepada media, Sabtu, 18 Maret. Bisnis geothermal bukan bisnis jangka pendek seperti sektor retail atau bisnis start-up yang cepat cepatnya.

"Geothermal can be enjoyed in the next 8-9 years. Entering the geothermal business is good, but first look at the risks," he explained. But it became an anomaly when PGEO financed a long term investment using the short term financing method. Long term business but looking for short-term capital. Opening shares to the public, where investors think it can bring short-term profits.

Worse yet, more than 50 percent of stock investors in Indonesia are retail investors. As is known, retail investors are mostly traders who observe day-day stock movements to take short-term dollars. This is clearly different from the geothermal business character.

Lanjar Capital Market Observer Nafi said the oversubscribed, which was said to have reached 3.8 times when PGEO debuted on the stock exchange, backfired and disappointed retail investors.

PGEO's share price only rose a few minutes after the opening of the IPO, said Nafi, who once served as Head of Research Reliance Sekuritas Indonesia.

But then it fell until it experienced a Lower Auto Rejection aka ARB. Until three weeks later PGEO's shares continued to be under pressure below the IPO price. The promotion before the IPO was voiced by the large number of PGEO's stock enthusiasts and their good fundamentals seemed to be just a figment for investors.

BUMN Institute Synergy Executive Director Achmad Yunus detected the potential for mismanagement in Pertamina through the IPO plan of a number of subsidiaries. After PGE, PT Pertamina Hulu Energi (PHE) will also go public this year.

He considered that in the future Pertamina would face the loss of power due to the act of releasing state shares in a number of these subsidiaries. Yunus is worried that this will be a new threat for Pertamina to enter the bankruptcy black hole amid the company's poor management system.

If you recall, the story of Pertamina's fall that occurred in the 1970s could happen again. Quoting the Washington Post published on October 12, 1977, Pertamina in Indonesia almost collapsed in 1975 after failing to pay foreign loans to finance a growing new subsidiary.

Then, wrote the Washington Post, when Pertamina seemed unable to pay for it at the beginning of 1975, the Indonesian government finally closed the debt.