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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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Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Planning Commission, India
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
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