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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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- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
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