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