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