Indonesia and Viet Nam are the Southeast Asian nations currently facing the most significant financial hurdles in funding new power grid projects. According to the authors of the newly released report, the state-owned power utilities in these two countries are struggling with high levels of debt and limited cash flow compared to their neighbors, making it difficult for them to borrow the massive sums needed for regional energy integration.
The report states that “PLN and Viet Nam Electricity National Power Transmission Corporation (EVNNPT) face tighter constraints” because both “operate with higher leverage (3.2x and 5.2x net debt/EBITDA ratio) and low OCF to net debt coverage (17-20%), limiting their ability to take on additional borrowing without jeopardising credit quality.”
In simpler terms, these national power companies already owe a lot of money relative to their earnings. This high level of existing debt means that taking on new loans to build expensive underwater cables and transmission lines could hurt their credit scores. While other countries like Singapore and Thailand have strong financial foundations, the utilities in Indonesia and Viet Nam have much less extra cash on hand to cover their repayments, which creates a bottleneck for major infrastructure projects.
The report “Financing the ASEAN Power Grid” was published by the International Energy Agency in Paris in March 2026. Lead author James Bragg and a team of analysts provide a comprehensive framework for unlocking the capital required to build a more integrated and sustainable energy future for Southeast Asia.
