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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, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
Thursday, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
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- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Australian Coal Association
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- The University of Queensland
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
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