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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, 25 November 20
MARKET INSIGHT - INTERMODAL
Over 90% of the world’s goods are transported by sea. LPG is a clean, energy efficient and portable fuel that is being marketed at an afforda ...
Friday, 20 November 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 ...
Thursday, 19 November 20
MARKET INSIGHT - INTERMODAL
As we are moving towards the end of the year, the overall deal landscape of the dry bulk sector corresponding to the second half of 2020 (up to dat ...
Tuesday, 17 November 20
COAL SQUEEZE INTENSIFIES - BALTIC EXCHANGE
The message from the top is clear: cut out coal. While the regulatory pressure has been evident for some time, the race to banish the black stuff s ...
Tuesday, 17 November 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 128.72 points Monday, up 0.35 percent week on week.
The index, released by China ...
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- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
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- SMG Consultants - Indonesia
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- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Posco Energy - South Korea
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
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- PowerSource Philippines DevCo
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- SMC Global Power, Philippines
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- Baramulti Group, Indonesia
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- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- The University of Queensland
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
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- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
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