Fitch Affirms Geo Dipa at 'AAA(idn)'; Outlook Stable

(Fitch Ratings - Jakarta - 17 Nov 2025)--Fitch Ratings Indonesia has affirmed PT Geo Dipa Energi (Persero)'s National Long-Term Rating at 'AAA(idn)'. The Outlook is Stable.

The affirmation and Stable Outlook reflect the government guarantees on about 97% of the geothermal energy company's debt as of end-September 2025 (2024: 96%). This leads to the equalisation of Geo Dipa's rating with that of the Indonesian sovereign (BBB/Stable), based on Fitch's government-related entities (GRE) rating criteria.

Fitch has also revised Geo Dipa's Standalone Credit Profile (SCP) down to 'bbb+(idn)' from 'a-(idn)', reflecting rising leverage amid a high-capex period and weaker cash flow generation. The SCP is supported by the company's long operational history, strong counterparties, stable margin and long-term revenue visibility, balanced by a small scale and our expectation that leverage will rise in the medium term on debt-funded expansion.

'AAA' National Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union.

Key Rating Drivers

Government Guarantees: Fitch expects the share of Geo Dipa's government-guaranteed debt to remain above the 75% threshold for equalising a GRE's rating with that of the sovereign. The guaranteed portion comprises USD300 million of loans from the Asian Development Bank (AsDB, AAA/Stable) and USD35 million from AsDB's Clean Technology Fund to finance expansion capex, all backed by guarantees from PT Penjaminan Infrastruktur Indonesia (Persero) (BBB/AAA(idn)/Stable) and Indonesia's Ministry of Finance.

At end-October 2025, AsDB also approved an additional USD180 million government-guaranteed loan to support the Dieng Unit 2 and Patuha Unit 2 (D2P2) projects.

Disruption to Reduce EBITDA: We forecast EBITDA to fall to around IDR550 billion a year in 2025-2026 (2024: IDR662 billion). This is due to a turbine trip at Dieng Unit 1 that caused a 50-day forced outage in 1Q25 and a derating to 25 MW from its 60 MW nameplate capacity.

Management plans to replace the turbine rotor in 2027 and we assume the lower capacity lasts till then. Relative to a no-derating case, this would raise EBITDA net leverage by 0.5x-1.0x over the period. We expect EBITDA to recover to IDR650 billion in 2027 as Patuha Unit 2 enters service in 2Q27.

Leverage to Rise on Capex: Fitch projects EBITDA net leverage to peak at 8.0x-9.0x in 2026-2027 (2024: 3.1x), coinciding with the heavy construction phase of the D2P2 projects, and lower EBITDA from the Dieng Unit 1 derating. We estimate that EBITDA net leverage will moderate from 2028 following D2P2's commissioning but is likely to remain above 5.5x in the medium term. Geo Dipa's deleveraging path will depend on the execution and commissioning of D2P2, realisation of capex and projects beyond D2P2 and recovery of Dieng Unit 1.

D2P2 Broadly on Track: We expect minimal deviation from management's latest target commercial operation dates (COD) for D2P2: 2Q27 for Patuha Unit 2, and 2Q28 for Dieng Unit 2 from the previous estimate of 4Q27. Patuha Unit 2's engineering, procurement, and construction (EPC) contract is effective, and physical works began in late January 2025. Management expects Dieng Unit 2's EPC contract to become effective in December 2025.

Rising Capex on D2P2: We expect capex to rise to IDR2.5 trillion-3.0 trillion a year in 2026-2027 (2025F: IDR700 billion), 85% of which will be for D2P2. Maintenance capex is likely to be higher, averaging IDR250 billion a year (2024: IDR117 billion) for planned overhauls, including at Dieng Unit 1. Beyond D2P2, we see modest exploration and development capex of IDR80 billion-150 billion a year in 2026-2027, below management's budget. Geo Dipa aims to increase capacity by 965 MW in the next 10 years, but we expect it to advance cautiously after D2P2.

Asset Concentration: Geo Dipa's expansion projects are likely to reduce concentration risk over the medium term. Its current operation is highly concentrated, with only two main power plants. This exposes the company to operational risks from those plants. Dieng Unit 1 has been operational since 2002, while Patuha Unit 1 commissioned in 2014. Operational and asset concentration risks are alleviated by extensive insurance coverage, including for damage to property and business interruption loss.

Long-Term Revenue Visibility: We forecast average operating cash flow of about IDR350 billion a year over the next three years (2024: IDR424 billion), reflecting the derating at Dieng Unit 1. Geo Dipa sells all output under long-term take-or-pay energy sales contracts with PT Perusahaan Listrik Negara (Persero) (PLN, BBB/Stable), which extend over the next 20 years. The tariff mechanism is linked to the US dollar, reducing foreign-currency mismatch on the company's US dollar-denominated debt.

'Very Strong' Support Precedents, Contagion Risk: The government's 'Very Strong' precedents of support to Geo Dipa reflect prior equity injections and high guaranteed debt. We believe its default would affect the sovereign's and other GREs' funding access and cost. High multilateral loans imply the government's strong support to keep access to such facilities. Geo Dipa is likely to receive exceptional support as a special-mission vehicle.

'Strong' Oversight: The government has 'Strong' decision-making and oversight of the company, but we view Geo Dipa's preservation of government policy role as not strong enough. We may downgrade the rating should government-guaranteed debt fall below 75%, but we do not expect this in medium term.

Peer Analysis

Perusahaan Umum Lembaga Penyelenggara Pelayanan Navigasi Penerbangan Indonesia (AirNav Indonesia, AAA(idn)/Stable) is also rated equal to the sovereign, reflecting its important policy role, and the government's involvement in its decision-making and oversight. As the country's sole air-navigation services provider, it operates under tight regulation. We assess government support precedents and funding-contagion risk as 'Strong', with prior state capital injections. Given AirNav Indonesia's pivotal role in aviation safety, a default would attract international scrutiny.

By contrast, we do not view Geo Dipa or Perusahaan Umum Kehutanan Negara (Perum Perhutani, A-(idn)/Stable) as key public-service providers, though both have government mandates. Perum Perhutani is rated on a standalone basis as its debt is not guaranteed by the government and we see minimal contagion risk from a default.

Geo Dipa's SCP is below AirNav Indonesia's 'a(idn)' and Perum Perhutani's 'a-(idn)'. AirNav Indonesia's strong cash reserves underpin its net cash position. Perum Perhutani's leverage is lower than Geo Dipa's, but this advantage is tempered by Perum Perhutani's greater margin volatility due to commodity exposure. Geo Dipa's margins and cash flow are steadier under long-term energy sales contracts.

Key Assumptions

Fitch's Key Assumptions Within the Rating Case for the Issuer:

-- Electricity generation of around 750 gigawatt hours (GWh) in 2025, 700GWh in 2026, 860GWh in 2027 and 1,300GWh in 2028 (2024: 859GWh)

-- Tariff increase based on inflation, in line with Geo Dipa's energy sales contract with PLN

-- EBITDA margin to remain at around 55% in 2025-2028 (2024: 57%)

-- Minimal working-capital requirements, except in 2028, when the Patuha-2 and Dieng-2 power plants commence operation

-- Capex of IDR700 billion-750 billion in 2025 and IDR2.5 trillion-3.0 trillion a year in 2026-2027 (2024: IDR606 billion, 9M25: IDR313 billion) used for EPC work for the Patuha-2 and Dieng-2 projects

-- Government capital funds to support part of Geo Dipa's capex in 2025-2027

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

-- Negative rating action on the sovereign.

-- Although unlikely in the medium term, government-guaranteed debt falling to below 75% of total debt on a sustained basis.

-- Any material changes in Geo Dipa's shareholding structure.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

-- No positive rating action is possible, as the company is already at the highest level on the national scale.

For the sovereign rating of Indonesia, the following sensitivities were outlined by Fitch in a rating action commentary on 11 March 2025:

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

-- Public Finances: A material increase in the overall public debt burden closer to the level of 'BBB' category peers, resulting, for example, from a substantial rise in fiscal deficits, or materialisation of contingent liabilities.

-- External Finances: A sustained decline in FX reserve buffers, resulting, for example, from outflows stemming from deterioration in investor confidence or large FX interventions.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

-- Public Finances: A marked improvement in the government revenue ratio closer to the level of 'BBB' category peers, including from better tax compliance or a broader tax base, which would strengthen public finance flexibility.

-- External Finances: A material reduction in external vulnerabilities, for instance, through a sustained increase in FX reserves or lower exposure to commodity price volatility.

-- Structural: Significant improvement in structural indicators, such as governance standards, closer to those of 'BBB' category peers.

Liquidity and Debt Structure

Geo Dipa held IDR888 billion of readily available cash at end-September 2025. This comfortably covered IDR259 billion of debt maturing within one year. The company will rely on external borrowings to fund its sizable capex programme. We view its access to domestic banks and development finance institutions as solid, supported by government ownership and a large share of government-guaranteed debt.

Geo Dipa still has an ample undrawn facility limit with AsDB to finance the second phase of the Dieng and Patuha plants. It includes about USD120 million under AsDB's ordinary capital resource and USD32 million from the Clean Technology Fund at end-September 2025. Geo Dipa has almost fully used the USD10 million grant under Japan Fund for the Joint Crediting Mechanism for Patuha expansion. We estimate the rupiah value of Geo Dipa's annual US dollar debt maturities in 2027 to 2028 will be IDR300 billion-400 billion.

Issuer Profile

Geo Dipa is a geothermal energy company. It is a special-mission vehicle owned by the Indonesian government through the Ministry of Finance (94.5%) and PLN (5.5%).

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The rating of Geo Dipa is directly linked to the credit quality of its parent, the Indonesian sovereign. A change in Fitch's assessment of the credit quality of the parent would automatically result in a change in the rating on Geo Dipa.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. (ends)