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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
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
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
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
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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- VISA Power Limited - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
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