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