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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, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
Wednesday, 02 September 20
MARKET INSIGHT - INTERMODAL
The imminent global shift towards eco-friendliness has caused divide among the shipping community because there is no outlined, clear-cut way via w ...
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- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
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- Planning Commission, India
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- Economic Council, Georgia
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- Renaissance Capital - South Africa
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- The University of Queensland
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- Coalindo Energy - Indonesia
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- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
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- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
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- Australian Commodity Traders Exchange
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- Xindia Steels Limited - India
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- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
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- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
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- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
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- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
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- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- The Treasury - Australian Government
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- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Chamber of Mines of South Africa
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- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
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- Energy Development Corp, Philippines
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- Australian Coal Association
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- SMC Global Power, Philippines
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- Wood Mackenzie - Singapore
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- Power Finance Corporation Ltd., India
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- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
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- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
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- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
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- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
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- Indian Oil Corporation Limited
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- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
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- White Energy Company Limited
- Riau Bara Harum - Indonesia
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