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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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Monday, 20 July 20
OIL PRICE OF $40-43 PER BARREL MORE OR LESS BALANCED - NOVAK | TASS
The Russian Ministry of Energy considers the current oil price of $40-43 per barrel more or less balanced and does not expect price changes after t ...
Monday, 20 July 20
SUPRAMAX: A 63,000 OPEN NORTH CHINA FIXING AN AUSTRALIAN ROUND IN THE LOW $10,000S - BALTIC BRIEFING
Capesize
The capesize market showed some resistance this week to recent losses as all routes saw a small uptick in value to end the week. With ...
Friday, 17 July 20
MISC MALAYSIA ENTERS INTO PURCHASE AGREEMENTS AND TIME CHARTER PARTIES FOR SIX VLECS
MISC Berhad (MISC) has entered into Memorandum of Agreements (MOAs) with six indirect wholly-owned subsidiaries of Zhejiang Satellite Petrochem ...
Wednesday, 15 July 20
HOW MEANINGFUL ARE SOME ESTIMATES FOR INDIA’S COAL CONSUMPTION DATA? - IEEFA
In recent years, BP's estimates for India have contained what appears to be a record of over-optimistic projections
BP’s a ...
Wednesday, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
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- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- The University of Queensland
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Planning Commission, India
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Australian Coal Association
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
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