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