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Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
 On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Although the report showed a net profit increase of IDR22 trillion (tn), a 53% rise from 2022, the Institute for Energy Economics and Financial Analysis (IEEFA) calculates that PLN would have recorded a substantial loss of IDR120tn without subsidies and compensations from the Government of Indonesia (GOI).
At first glance, PLN’s cash reserves increased by 9% for the fiscal year 2023, and its electricity sales rose around 7%. This increase in sales contributed the most to PLN’s income growth, amounting to IDR22.2tn. However, despite the improved performance and positive figures, there are underlying red flags.
Despite increased cash reserves, PLN’s liquidity ratio (0.92), quick ratio (0.79), and cash ratio (0.39) were all below 1.00. These figures indicate that the utility is struggling to meet its urgent payment obligations with cash or current assets.
PLN’s financial performance heavily depends on GOI’s subsidies and compensations, which have risen by 16.4% from IDR123tn in 2022 to IDR143tn in 2023. However, these incremental increases could halt in 2025. Discussions at the Ministry of Finance are underway to reduce PLN’s subsidies and compensations under the new administration's programs and policies.
An imminent solution for PLN's financial independence is required. PLN's fiscal potential can be unlocked with minimal GOI assistance by improving efficiency, particularly by reducing operating costs through the adoption of renewables.
Reducing cost and volatility via renewables
The Basic Cost of Providing Electricity (BPP) is arguably the main factor determining electricity costs, which are then translated into tariffs paid by customers. Any increase in BPP adds to the GOI’s financial burden.
Since 2020, coal and gas purchase costs have increased significantly. In 2023, purchased electricity from coal and gas contributed to a 14% increase in operational expenses and accounted for 63% of total operating costs. On average, PLN spent around US$4-5 cents per kilowatt hour (¢/kWh) for coal purchases, almost 40% higher than in 2020.
Additionally, PLN’s exposure to US$-denominated coal prices requires reconsideration. Despite the GOI's coal price cap, PLN has struggled with coal price fluctuations due to exchange rate changes. While purchases are denominated in US$, PLN’s tariff collections are in Indonesian rupiahs.
Apart from the base fuel purchasing costs, PLN also had to factor in shipping and plant maintenance costs. As coal-fired power plants age, they lose efficiency and require more coal to produce each kilowatt hour (kWh) of electricity.
Considering the difficulty in reducing purchased electricity costs and renegotiating power purchase agreements with independent power producers, PLN should accelerate the transition from fossil fuel-based energy to avoid price volatility.
Renewable energy sources are low-cost to operate compared to fossil fuel power plants. Furthermore, IEEFA’s recent report has shown that the levelized cost of electricity is around US$4.78¢/kWh for solar and US$4.77¢/kWh for wind. In comparison, coal costs around US$6.5¢/kWh, which is at least US$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
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- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Australian Coal Association
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- White Energy Company Limited
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
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