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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, 20 July 20
OIL PRICE OF $40-43 PER BARREL MORE OR LESS BALANCED - NOVAK | TASS
The Russian Ministry of Energy considers the current oil price of $40-43 per barrel more or less balanced and does not expect price changes after t ...
Monday, 20 July 20
SUPRAMAX: A 63,000 OPEN NORTH CHINA FIXING AN AUSTRALIAN ROUND IN THE LOW $10,000S - BALTIC BRIEFING
Capesize
The capesize market showed some resistance this week to recent losses as all routes saw a small uptick in value to end the week. With ...
Friday, 17 July 20
MISC MALAYSIA ENTERS INTO PURCHASE AGREEMENTS AND TIME CHARTER PARTIES FOR SIX VLECS
MISC Berhad (MISC) has entered into Memorandum of Agreements (MOAs) with six indirect wholly-owned subsidiaries of Zhejiang Satellite Petrochem ...
Wednesday, 15 July 20
HOW MEANINGFUL ARE SOME ESTIMATES FOR INDIA’S COAL CONSUMPTION DATA? - IEEFA
In recent years, BP's estimates for India have contained what appears to be a record of over-optimistic projections
BP’s a ...
Wednesday, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
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- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- PTC India Limited - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
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