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