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