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