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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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Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
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- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Parliament of New Zealand
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
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