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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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Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
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- Neyveli Lignite Corporation Ltd, - India
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- PetroVietnam Power Coal Import and Supply Company
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- Australian Coal Association
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Planning Commission, India
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- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
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- Rashtriya Ispat Nigam Limited - India
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- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- MS Steel International - UAE
- Chamber of Mines of South Africa
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- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
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- Ministry of Finance - Indonesia
- The University of Queensland
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- Kumho Petrochemical, South Korea
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- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
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- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
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- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
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- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
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- Intertek Mineral Services - Indonesia
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- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- ASAPP Information Group - India
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- Baramulti Group, Indonesia
- Minerals Council of Australia
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- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
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- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
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- Kaltim Prima Coal - Indonesia
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- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
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- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
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- Goldman Sachs - Singapore
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