Pertamina Holding: Walk The Talk (1)
President Joko ‘Jokowi’ Widodo has reportedly signed a Government Regulation regarding consolidation of state oil and gas companies under Pertamina. Pursuant to the regulation, the government will first transfer its 65% shares in PT Perusahaan Gas Negara (PGAS) Tbk to Pertamina.
Resources Windfall & Fiscal Sustainability
Coal producers wait nervously President Joko ‘Jokowi’ Widodo’s decision on coal price for domestic market obligation (DMO). They warned the government that substantial discount (as proposed by PLN) will endanger the State budget from falling revenues in the form of royalties and corporate income tax. This, however, might be offset by significant windfall from other commodities.
Nickel: Sekar Group + Shandong Xinhai
Bisnis Indonesia newspaper reported this morning about a plan from Sekar Group and Shandong Xinhai Technology Co Ltd to build an integrated nickel smelter in Konawe, Southeast Sulawesi with US$2 billion of investment. Really? That much?
Coal Player: TRAM, Another TRAP?
Trada Alam Minera (TRAM), new name for Trada Maritime, is among the best performing stocks with 100% gain year-to-date. At the last quoted price, TRAM has market capitalization of Rp19.85 trillion or US$1.5 billion, more than twice of the established coal producer PT Harum Energy Tbk (HRUM)—-Rp8.9 trillion.
Food Security (3): Corn
Corn is primarily composed of carbohydrates, but it is also a decent source of protein. It is consumed directly or processed into bakwan (corn fritter), mixed with other vegetables. In some areas of eastern part of Indonesia, corn is cooked with rice. In poultry feed, the largest segment of Indonesia’s animal feed industry, corn has an inclusion rate of around 50%, and accordingly very important for protein supply for the nation.
Food Security (2): Soybean
The biggest challenge for Indonesia’s food security is protein, both animal and plant. In this issue, we talk about soybean, considered one of the main sources of protein. The government has set an ambitious target to achieve self-sufficiency this year, but not only this will be difficult to achieve, but misleading.
Geo Energy & China Demand
SGX-listed Geo Energy produced 7.7 million tons of coal in 2017, new record level, with majority of the shipment driven by sustainable strong demand in China and resilient average coal index prices of around US$43 per ton in 2017.
Why The State Should Get More from Coal IUPs
Instead of abrupt capping of coal price for domestic market obligation (DMO) volume to support state power producer PT Perusahaan Listrik Negara (PLN), the government should seriously review tax and royalty regime in the coal industry, especially to reduce the gap between those operating under Coal Contract of Work (CCoW) and Mining Business Permit (IUP).
PLN & Coal Supply Issues
Unlike other major state power producers in the region, Indonesia’s PT Perusahaan Listrik Negara (PLN) relies nearly 100% on external parties for the supply of coal. China Shenhua Energy, which has 56,288 MW of power generation capacity, for example, produces nearly 300 million tons of coal. It is understandable, even if it is too late, if PLN wants to acquire coal assets.
Food Security (1): Peanut & Garlic
Other than served as roasted peanuts, chocolate bars, cookies, or cocktail peanuts, Indonesian dishes contain lots of peanut sauce. Dressing for vegetable salad (gado-gado), fruit salad (rujak), skewers/satay (chicken, goat, beef), siomay, nasi uduk (steamed rice cooked in coconut milk), etc. Peanut butter also increasingly popular for bread, cookies, etc.