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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, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
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- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Planning Commission, India
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- MS Steel International - UAE
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
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