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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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- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Planning Commission, India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
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