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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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Thursday, 10 September 20
DRY BULK SHIPPING: CHINA'S DEMAND KEEPING THE DRY BULK MARKET GOING - PETER SAND | BIMCO
Overview
An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand in the rest of the wo ...
Thursday, 10 September 20
TANKER SHIPPING: FREIGHT RATES BACK AT LOSS-MAKING LEVELS AFTER 12 VERY PROFITABLE MONTHS - BIMCO
Overview
A stunningly strong 12 months for the tanker shipping industry is now being replaced by lower freight rates, as lower oil product ...
Thursday, 10 September 20
INDIA'S COAL IMPORTS STUMBLE IN AUGUST, RAISING RISK OF SLOW RECOVERY - REFINITIV | BANCHERO COSTA
After posting a mild recovery in July, India's coal imports have stumbled in August as the South Asian nation battles to restart it ...
Thursday, 10 September 20
THE FIRST 8 MONTHS OF 2020, INDONESIA EXPORTED 217.4 MLN TONNES OF COAL BASED ON REFINITIV - BANCHERO COSTA
The coal market has been hit by a weaker global economy as a result of COVID-19 pandemic and falling industrial electricity demand ...
Wednesday, 09 September 20
MARKET INSIGHT - INTERMODAL
The uneventful summer lull which is coming to an end soon has left its stigma on the newbuilding market, which has already been devastated by the g ...
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- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- The University of Queensland
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- White Energy Company Limited
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
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