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