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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, 17 November 20
AUSTRALIAN COAL EXPORTS TO CHINA SLUMP, BUT PRICES ARE MIXED - REUTERS
China’s unofficial ban on coal imports from Australia is starting to take its toll on volumes, with departing cargoes down sharply so far in ...
Friday, 13 November 20
SHIPPING OUTLOOK TURNS STABLE ON EBITDA GROWTH, IMPROVING SUPPLY-DEMAND BALANCE - MOODY’S
Outlook revised to stable from negative.
The global shipping industry is on course to perform better overall than we had previously ex ...
Friday, 13 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 ...
Monday, 09 November 20
INDONESIA MAY CUT BIODIESEL USE TARGET AS SUBSIDY FUND DEPLETES - FITCH
The Indonesian government may rein in its push to increase use of biodiesel as it now comes at higher cost following a fall in crude oil prices and ...
Monday, 09 November 20
SOUTH AFRICA: COAL MARKET CONDITIONS HAVE ' DETERIORATED MATERIALLY' - IEEFA
The Asian seaborne thermal coal pool is drying out
Resource Generation Ltd’s proposed but long delayed Boikarabelo coal mine i ...
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- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Planning Commission, India
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
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