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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, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
Tuesday, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
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- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
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