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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, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
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- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- The University of Queensland
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
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