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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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Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weaknes ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
Tuesday, 07 July 20
WHAT DOES THE PATHWAY TO A NET-ZERO ECONOMY LOOK LIKE FOR MINERS? - WOOD MACKENZIE
Wind, solar, electric vehicles, stationary storage and transmission are all central to achieving the Paris Agreement decarbonisation goals.
&nb ...
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- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- White Energy Company Limited
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- PTC India Limited - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
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