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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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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Minerals Council of Australia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- PTC India Limited - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- VISA Power Limited - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- The University of Queensland
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Central Java Power - Indonesia
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Economic Council, Georgia
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Star Paper Mills Limited - India
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