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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 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- MS Steel International - UAE
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- White Energy Company Limited
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Australian Coal Association
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Economic Council, Georgia
- PTC India Limited - India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
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