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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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Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
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