Indonesian state-owned electricity company PT Perusahaan Listrik Negara (PLN) is preparing to issue a “green and/or sustainable financing” instrument as early as January 2021 following the publication of its Statement of Intent on Sustainable Financing Framework in November. And a new briefing note from the Institute for Energy Economics and Financial Analysis (IEEFA) finds that PLN must be prepared for a much higher level of scrutiny around its continuing coal investments and lack of progress in renewable energy investment projects when the company does launch its debut green and/or sustainable bonds.
Author Christina Ng believes that although this is the right direction, PLN now needs to work hard to build investor credibility given its track record.
“PLN’s recent commitment to provide clean and sustainable energy for Indonesia in line with government expectations could be attractive to ESG (environmental, social, and corporate governance) fixed income investors,” she said, adding “The company’s renewable energy performance however will be of concern. PLN’s renewable energy plans lag its regional and global peers. The company has not implemented its project investments as planned and has a limited track record of successful implementation.”