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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, 09 September 20
MARKET INSIGHT - INTERMODAL
The uneventful summer lull which is coming to an end soon has left its stigma on the newbuilding market, which has already been devastated by the g ...
Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- White Energy Company Limited
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- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- GMR Energy Limited - India
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- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
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- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
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- Bhoruka Overseas - Indonesia
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- London Commodity Brokers - England
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- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
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- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
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- The University of Queensland
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- Economic Council, Georgia
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- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Australian Coal Association
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
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