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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, 15 July 20
MARKET INSIGHT - INTERMODAL
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Tuesday, 14 July 20
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China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
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Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
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This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
Friday, 10 July 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Economic Council, Georgia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
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