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