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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, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- White Energy Company Limited
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Indian Energy Exchange, India
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