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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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Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Economic Council, Georgia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- PTC India Limited - India
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
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