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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, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
Friday, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
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- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
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