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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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Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weaknes ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
Tuesday, 07 July 20
WHAT DOES THE PATHWAY TO A NET-ZERO ECONOMY LOOK LIKE FOR MINERS? - WOOD MACKENZIE
Wind, solar, electric vehicles, stationary storage and transmission are all central to achieving the Paris Agreement decarbonisation goals.
&nb ...
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- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- GMR Energy Limited - India
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
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