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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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Friday, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the com ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
Wednesday, 27 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.94 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.03 points Monday, up 0.94 percent week on week.
The index, released by China ...
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- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Planning Commission, India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- The University of Queensland
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
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