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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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Monday, 29 June 20
ULTRAMAX: A 58,000 FIXING DELIVERY SINGAPORE TRIP, VIA EAST COAST INDIA, REDELIVERY CHINA IN THE LOW $12,000S - BALTIC BRIEFING
Capesize
As the halfway mark of 2020 arrives, the capesize market is making new highs for the year. From persistent lows earlier caused by a ba ...
Saturday, 27 June 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 26 June 20
WHAT TODAY'S BAILOUTS CAN DO FOR TOMORROW'S ECONOMIES - WORLD ECONOMIC FORUM
The COVID-19 crisis provides an opportunity for governments to build fairer, more sustainable and more resilient economies.
Governments a ...
Thursday, 25 June 20
ALL YOU WANT TO KNOW ABOUT COAL MINE AUCTIONS - THE HINDU BUSINESS LINE
Last week, Prime Minister Narendra Modi threw open the auction of 41 coal blocks for commercial mining. The decision, which was part of the announc ...
Wednesday, 24 June 20
MARKET INSIGHT - INTERMODAL
The World Bank estimates that the global economy will fall by 5.2% this year, underlining that the Covid-19 pandemic has had rapid and massive cons ...
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- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
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