Friday, February 3, 2023

TOBA sets US$ 50-60 million Capex for 2023

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Coal and electric vehicle company PT TBS Energi Utama Tbk (TOBA) – which 10% of shares are owned by Coordinating Minister for Maritime Affairs and Investment Luhut Panjaitan – has allocated between US$ 50 million and US$ 60 million of capital expenditure (Capex) for the year 2023. The Capex would be allocated for the development of the new EVs and the renewable energy with its subsidiaries.

TOBA was established in 2007, under the name PT Buana Persada Gemilang. Today, the company focuses on thermal coal production, EVs and renewables whereas its production is in East Kalimantan. The company has a concession area of about 7,087 Hectares (Ha) and 3 mining concessions. Through the years, it has acquired: 

  • PT Adimitra Baratama Nusantara (ABN); 
  • PT Indomining (IM);
  • PT Trisensa Mineral Utama (TMU);
  • PT Perkebunan Kaltim Utama I (PKU);
  • PT Gorontalo Listrik Perdana (GLP);
  • PT Minahasa Cahaya Lestari (MCL);
  • PT Toba Bara Energi (TBAE);
  • PT Adimitra Energi Hidro (AEH);
  • PT Bayu Alama Sejahtera (BAS); and 
  • PT Energi Kreasi Bersama.

The pilot project and renewable supervision

TOBA is focusing on its business pillars on renewables and EVs, which will be part of the company’s Capex in 2023. Currently, TOBA is engaging in some other renewable projects such as: 

  • Mini hydro power plant (PLTMh) in Lampung, through its subsidiary PT Adimitra Energi Hidro (AEH). It has been receiving a Power Purchasing Agreement (PPA) from state-owned electricity company PT PLN since 2021.
  • Wind power plant (PLTB) through its subsidiary PT Bayu Alam Sejahtera (BAS). However, the project is still waiting for a Request for Proposals (RFP).

TOBA Head of Corporate Strategy Nafi Sentausa said the Capex would be allocated for the development of the new EVs and the renewable energy with its subsidiaries.

The company has built a joint venture with PT GoTo Gojek Tokopedia Tbk, named Electrum, to establish an electric motorcycle assembly and manufacturing facility in 2023. Electrum has conducted a pilot project since February 2022 to create prototypes for electric motorbikes for the domestic market. In the next 3 years, Electrum targets sales of 500,000 units of electric motorbikes.

Meanwhile, Sentausa explained that TOBA’s investment needs by 2025 would reach US$ 500 million, some US$ 150 million would be for the new renewable energy.

Risks in EVs and renewable energy

However, there are certain risks that should be addressed in EVs and renewable energy. According to Marsh insurance broking and risk management, there are risks in construction, environment, regulatory, technology and operation in renewable energy projects.

Construction risks include the scope of the project, contractor experience, design experience, supply chain, staff skills, local conditions and force majeure. There are substantial risks from construction costs and the experiences of the parties involved that could lead to significant problems and delays in the project.

Regulatory risks means project owners face the risk of costs and fines or delays due to permits, licenses, approvals, or the elimination of state or tax credits. 

Technological risks means renewable energy projects require technology systems that are up-to-date at their maximum level. But, design flaws from its manufacturer, contractors, or inexperience with technology could lead to problems in the long-term. This could also lead to quality issues and increase costs.

Operational risks include maintenance and personnel cost. Renewable energy also could lead to maintenance problems, which leads to energy output problems. Operational maintenance could include facilities such as variable and fixed costs that include servicing contracts, insurance, and staffing.

Environmental risks and renewable projects include inherent problems in the environment. The risks such as the pollution it produces, and the impact and effects that it produces on its vicinity. Site selection could also provide a potential risk to the company or investors.

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