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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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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Planning Commission, India
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- The University of Queensland
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Minerals Council of Australia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
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