Indonesia is a country with abundant natural resources, including spices, oil, gas, geothermal, etc. Is thus our duty as human resources to be preserved and used it well. Foreignand local investors are trying to grap some profit out of Indonesia natural resources. One of the prospective business related to natural resources is geothermal business. Geothermal is the enrgy produced from the interaction of heat source with water or also known as water rosk interaction. The interaction produces steam that can be utilized to generate turbine and produces electricity. Unlike the fosil energy such as oil and coal, geothermal is a categorized as renewable energy by maintaining the water content that interacts with the heat source in the subsurface.

Competition is very high in geothermal business. Which company was playing the geothermal business are PT Medco Energy, Star Energy, Chevron, PT Pertamina Geothermal Energy. Unfortunately, in Indonesia geothermal business has one and only customer that is PLN. PLN fixed the buying price at US$ 4,6/kWh even though PGE want to sell it at US$8-9/kWh. Therefore, the only way to maiximize profit is through cost and expenses reduction.

PT Pertamina Geothermal Energy outsource many of its work/processes to external companies. In most cases the sub-contractor/vendor charge PGE with high price for its products/services.

This capita selecta try to offer a way or solution for PT PGE to reduce its cost and expenses, though collaboration with vendor, by using another type of contract called Cost Plus Incentive Fee (CPIF).



Research Location : PT Pertamina Geothermal Energy



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