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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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Tuesday, 08 December 20
MARKET ANALYSIS - ALLIED SHIPPING
It is now undisputed that oil consumption for 2020 will post a considerable drop, as demand for several petroleum products has plummeted since the ...
Tuesday, 08 December 20
PANAMAX: THE OVERALL MARKET SEEMS TO BE UNDER NEGATIVE PRESSURE - ALLIED
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A rather indifferent week for the Capesize market, with BCI 5TC figure finishing the week with slight losses of 0.8%. The Atlantic enj ...
Friday, 04 December 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 04 December 20
THE INDONESIA COAL PRICE REFERENCE REACHES THREE MONTH HIGH ON IMPROVING DEMAND OUTLOOK
COALspot.com: The Indonesia Coal Price Reference reaches three month high on improving demand outlook . The Indonesia Coal Price Reference rose by& ...
Wednesday, 02 December 20
GLOBAL MINING SECTOR OUTLOOK STABLE DUE TO CHINA'S RECOVERY - FITCH RATINGS
China’s post-pandemic economic recovery and sizeable infrastructure-focused government stimulus boosted global metals and mining prices, help ...
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- PTC India Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Australian Coal Association
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Economic Council, Georgia
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Deloitte Consulting - India
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
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