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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Planning Commission, India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Economic Council, Georgia
- The University of Queensland
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
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