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