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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 02 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- The University of Queensland
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Australian Coal Association
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
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