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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, 02 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Posco Energy - South Korea
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
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