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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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- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Australian Coal Association
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
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