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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, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
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- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
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