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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, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
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