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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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Thursday, 11 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
Tuesday, 09 June 20
BUNKER SUPPLY CONTRACTS - KEY CONSIDERATIONS FOR THE BUYER - GARD
KNOWLEDGE TO ELEVATE
Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale ...
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- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
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