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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, 30 September 20
MARKET INSIGHT - INTERMODAL
Spot rates for Capesize bulk carriers received a significant boost last week, however, there are certain reservations in the market regarding the p ...
Tuesday, 29 September 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.73 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.91 points Monday, up 0.73 percent week on week.
The index, released by China ...
Tuesday, 29 September 20
SHIPPING MARKET - ALLIED
Here we are, just a short breath before the final quarter of the year, and many are now debating to what extent we can really expect a firm dry bul ...
Tuesday, 29 September 20
INDONESIAN COAL COMPANIES' EARNINGS TO WEAKEN IN 2H20 - FITCH RATINGS
Rated Indonesian coal miners and contractors will have weaker operating and financial performances in the second half of 2020 than in the first, sa ...
Tuesday, 29 September 20
RUSSIA'S COAL PRODUCTION TO DROP BY 10.5% IN 2020, SAYS MINISTRY - TASS
Russia’s Economic Development Ministry projects a 10.5% decrease in coal production in the country in 2020 compared with last year to 395 mln ...
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- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Bhatia International Limited - India
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- PTC India Limited - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
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