Coal mining company PT TBS Energi Utama Tbk (TOBA), which 9.99% of its shares are owned by Coordinating Maritime Affairs and Investment Luhut Binsar Pandjaitan, is allocating 80%-90% of its Capital expenditure (Capex) for its non-coal business in 2023.
Established in 2002, TBS operates the exploration and production of oil and natural gas in Indonesia. The company’s main business activities include drilling, completion and workover of oil and gas wells and the production and sale of crude oil and natural gas.
The company has a number of majority shares in its subsidiaries as of 2021 such as:
- PT Toba Bara Sejahtera Tbk (TBSS), which ownership is 99.99%
- PT Toba Bara Energi Prima (TBEP), which ownership is 99.99%
- PT Toba Bara Energi (TBE), which ownership is 99.99%
- PT Toba Bara Energi Utama (TBEU), which ownership is 99.99%
Majority Capex for non-coal and subsidiaries
“Most of our Capex, or 80%-90%, [is allocated] for businesses outside of coal. Even if there is Capex [for] coal, it’s more for maintenance,” the company Deputy Director Pandu Sjahrir said on January 26, 2023, as quoted by market.bisnis.com.
TBS has yet to reveal the composition of its expenditures for 2023, but it plans to allocate more than a third of its Capex for PT Energi Kreasi Bersama (EKB) or better known as Electrum, a joint venture between the company and PT GoTo Gojek Tokopedia Tbk (GOTO). “More than a third [is Capex for Electrum],” said Sjahrir.
TBS Head of Corporate Strategy Nafi Achmad Sentausa said the company has allocated between US$ 50 million and US$ 60 million of Capex for 2023. “The allocation will be for renewable energy business and electric vehicles,” he said on December 1, 2022.
Electrum aims to produce 2 million electric motor units for domestic needs. It targets sales of 500,000 units by 2025. The construction of Electrum’s electric motor factory is expected to be completed by mid-2024. However, the company has not started the construction, nor informed its location.
Risks in coal and EV
In its coal business, TBS may face a decreasing demand for coal as more countries have begun their transition to renewable energy sources. This shift in energy consumption will eventually lower the company’s revenue.
In its electric vehicle business, Electrum will face a stiff competition from other EV players in the market, thus make it difficult to achieve its sales target. Additionally, there could be delays or issues in the construction of the electric motor factory, which could negatively impact Electrum’s operations.
