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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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Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
Saturday, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
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- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- White Energy Company Limited
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
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