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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, 29 January 21
OPEC+, COVID-19 AND ENERGY TRANSITION - 3 THEMES IMPACTING OIL MARKETS AND REFINING IN 2021 - WOOD MACKENZIE
Wood Mackenzie’s latest outlook report shows that the art of balancing oil markets and the refining sector in 2021 hinges upon three key them ...
Thursday, 28 January 21
STRONG CHINESE THERMAL COAL IMPORTS TO BENEFIT INDONESIAN MINERS IN THE NEAR TERM - FITCH RATINGS
China's thermal coal imports are likely to remain strong ahead of the Chinese New Year in mid-February on robust demand, high utilisation at do ...
Thursday, 28 January 21
WIND PROPULSION FOR DRY BULK CARRIERS - OLDENDORFF
Oldendorff Carriers (OC) has signed a Joint Development Project (JDP) with Anemoi Marine Technologies (Anemoi), Lloyd’s Register (LR) and Sha ...
Thursday, 28 January 21
BUMA PRICED A USD400 MILLION 7.75% 5-YEAR SENIOR NOTES
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama priced a USD400 million 5-year (non-callable 2-year)& ...
Wednesday, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
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- Marubeni Corporation - India
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
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