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Friday, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
 The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business years ago, but Indonesia’s PLN power company stands out as a laggard, focused on a confused menu of piecemeal generation options rather than holistic planning that provides system-level solutions, finds a new report from IEEFA, the Institute for Energy Economics and Financial Analysis.
PLN, alongside utilities worldwide, has suffered a severe drop in revenue as power consumption fell by as much as 20% in some cases amid the COVID-19 pandemic, writes Elrika Hamdi, author of the report Never Waste a Crisis – Indonesia’s PLN Needs A Coherent Strategy to Ride Out the COVID-19 Pandemic.
“But the roots of PLN’s problems are deeper than just the pandemic: PLN’s quiet crisis reflects dysfunctional planning and governance that have put the company into strategic paralysis, unable to change direction or adapt to new market realities,” says Hamdi.
“Despite all the warning signs, senior managers still run the power sector with an old-fashioned business-as-usual mindset. Unfortunately, a 2010 playbook will not save PLN from falling deeper into a modern-day debt trap. Neither will indulging an extractive economy mindset that fosters dependence on fossil fuel, just because it’s there”.
“There has to be a willingness to ask the hard questions when PLN’s ocean of red ink proclaims that PLN’s resource-driven development plans are obsolete in a high-technology world.”
The report notes that much of PLN’s current predicament stems from a plan to add a massive 35 gigawatts of generation capacity to Indonesia’s power supply that was poorly designed and implemented.
“The 35 GW program is a political promise that was meant to embody President Joko Widodo’s (Jokowi’s) ambition to fully electrify Indonesia. There is nothing wrong with the ambition, but the subsequent planning and execution has lacked accountability,” says Hamdi.
“Adding generation capacity has become a goal with little attention paid to long-term financial impacts or new system design options. In the absence of much-needed checks and balances, PLN has been driven to the brink and taxpayers will be left to pay the price.”
“PLN’s ability to sustain debt at this level rests firmly on Indonesia’s investment-grade sovereign credit rating and the government’s readiness to support PLN debtors in the event of financial distress,” says Hamdi, noting that PLN bonds are still relatively attractive to investors because of the company’s monopoly and its quasi-sovereign status.
The author also questions the accountability of government support for PLN. Noting both direct and indirect supports, including subsidies, compensation, capital injections, special accounting treatments and government guarantees, Hamdi says there appears to be little consistent oversight of how government support is used to dress up PLN’s accounting.
“The Ministry of Finance, considering PLN’s strategic importance, makes PLN a top priority, but that does not mean PLN’s financial problems can be effectively addressed by endless access to cheap debt that could eventually threaten Indonesia’s financial credibility,” she concludes.
“The best strategy for PLN would be to rebase their planning framework to focus on more cost-effective grid investments that improve the long-run efficiency of the whole power system. Private sector players cannot invest in the grid and have therefore crowded into the generation sector. This has accentuated PLN’s narrow focus on baseload generation has resulted in excess capacity and a brittle system that lacks flexibility. What’s needed now is a more grid-centric strategy that would permit PLN’s investment to enable a more efficient system. It is crucial for PLN to make sure that the power sector reform is not just cosmetic.”
About IEEFA
The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable, and profitable energy economy.
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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Planning Commission, India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- ASAPP Information Group - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Economic Council, Georgia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
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