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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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Tuesday, 29 December 20
CHINA COKING COAL FUTURES RISE FOR THIRD DAY ON SUPPLY WORRIES - REUTERS
Chinese coking coal futures extended gains into a third session on Monday, jumping as much as 6.2% as lower imports, sliding inventories and mines ...
Wednesday, 23 December 20
COKING COAL'S DECLINE LIKELY TO FOLLOW THE PATH OF THERMAL COAL’S PROGRESSIVE DEMISE - IEEFA
Technology disruption the likely theme of global energy markets in 2021
There has been a growing tsunami of climate commitment annou ...
Wednesday, 23 December 20
MARKET INSIGHT - INTERMODAL
As we all know, China forges more steel than the rest of the world combined, and even during this unprecedented pandemic, the nation is set to brea ...
Tuesday, 22 December 20
2021 DRY BULK OUTLOOK - SUPPLY GROWTH - TORVALD KLAVENESS
In the first article in the series we mentioned that dry bulk freight was in a super cycle between 2001 and 2008. The growth in global yard capacit ...
Tuesday, 22 December 20
INDIA'S COAL DEMAND IS SET TO EXPAND DESPITE PLUMMETING IN 2020 - IEA
Coal consumption in India amounted to 979 Mt in 2019, with the largest share being thermal coal (including lignite) for electricity generation (687 ...
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- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- The University of Queensland
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
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