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