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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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Wednesday, 01 July 20
MARKET INSIGHT - INTERMODAL
It was beginning of 2020 – close to 6 months from now – when we first experienced the huge impact of the COVID 19 outbreak on Ship Repa ...
Monday, 29 June 20
INDONESIAN COAL AT THE MERCY OF THE DRAGON AND TIGER - GHEE PEH | IEEFA
Coal sector analysts have been busy in recent months mapping the negative impact of low coal prices from the COVID-19 pandemic on Indonesian coal c ...
Monday, 29 June 20
FALLING DEMAND IN CHINA AND INDIA SIGNAL TOUGH TIMES AHEAD FOR INDONESIAN EXPORTS - GHEE PEH | EEFA
Assessing the Impact on Indonesian Coal Companies
The bad news for Indonesia’s coal companies is that they are likely to have ...
Monday, 29 June 20
INDIA COAL IMPORT OUTLOOK: WEAK DEMAND, IMPORT SUBSTITUTION, EXPECT 20% YOY DECLINE - GHEE PEH | IEEFA
For India, the coal demand indicators have clearly turned negative.
According to Argus Media, since the government declared a ...
Monday, 29 June 20
CHINA COAL IMPORT OUTLOOK: MANY MOVING PARTS, FORECAST TO FALL 10% YOY - GHEE PEH | IEEFA
China’s coal demand declined in the first quarter of 2020. According to the China National Coal Association, the country consumed 870mt in th ...
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- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Minerals Council of Australia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- PTC India Limited - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- The University of Queensland
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
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