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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, 02 December 20
INDONESIA CONSIDERING CLOSING 3,400MW SURALAYA COAL PLANT - THE JAKARTA POST
The government is considering to shut down the aging Suralaya coal-fired power plant (PLTU) in Cilegon, Banten, and replace it with green energy, a ...
Wednesday, 02 December 20
MARKET INSIGHT - INTERMODAL
It has been another busy week in the dry bulk secondhand market; a healthy number of sales reported predominantly from Japanese owners while owner& ...
Thursday, 26 November 20
DECLINE IN COAL EXPORTS ADDS TO NAVAJO-OWNED COMPANY'S PROBLEMS - IEEFA U.S.
Weak demand and low prices are likely creating steep losses for NTEC
U.S. coal exports to Asia—once heralded as the saving gra ...
Thursday, 26 November 20
COAL FINANCING QUICKLY DRYING UP WORLDWIDE - ANALYSTS : REUTERS
Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping ...
Wednesday, 25 November 20
LIBOR REPLACEMENT AND SHIP FINANCE - WHERE IS IT HEADING? - WFW
The likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. Th ...
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- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Australian Coal Association
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- The University of Queensland
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
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