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