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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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Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
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- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Minerals Council of Australia
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
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