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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, 14 May 20
NEW COVID-19 GUIDELINES FOCUS ON SAFE INTERFACE BETWEEN SHIP AND SHORE STAFF - GARD
At a time when the COVID-19 pandemic is affecting the global population, it is important that ships’ crew and port workers protect each other ...
Wednesday, 13 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.4 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.93 points Monday, down 0.4 percent week on week.
The index, released by Chin ...
Tuesday, 12 May 20
IN THE FIRST 4 MONTHS OF 2020, SOUTH KOREA IMPORTED 46.6 MLN TONNES OF CRUDE OIL BY SEA, A NET DECLINE OF 14.1% YOY - BC
South Korea is certainly one of the countries which has handled better the current Covid-19 crisis. In the first week of May 2020, new cases of ...
Tuesday, 12 May 20
OIL MARKET TURBULENCE PIVOTS FOCUS ON FLOATING STORAGE TECHNICAL NEEDS - LLOYD'S REGISTER
KNOWLEDGE TO ELEVATE
Negative oil prices and off-the-scale volatility in crude markets are positive for floating storage, as the next chapter ...
Tuesday, 12 May 20
A GLOBAL ECONOMIC RESTART HAS SLOWLY BEGUN AS COUNTRIES AROUND THE WORLD GRADUALLY - ALLIED
A global economic restart has slowly begun as countries around the world gradually set their return back to “normality”. Yet by all mea ...
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- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- Central Electricity Authority - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
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