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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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- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
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