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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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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 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, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- The University of Queensland
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Aditya Birla Group - India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
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