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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, 01 May 20
LUKOIL SHARES LUBRICANT EXPERIENCE AFTER FIRST 100 DAYS OF OPERATION ON VLSFO
KNOWLEDGE TO ELEVATE
After 100 days of VLSFO operation, LUKOIL Marine Lubricants is sharing recent experience on VLSFO operation with NAVIGO M ...
Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub ...
Monday, 27 April 20
INCIDENT INVESTIGATION: SEARCH FOR THE CAUSE, NOT THE VILLAIN - GARD
Incident investigations often conclude with placing the blame for an incident on the crew. Causes of the incidents are usually identified as proced ...
Monday, 27 April 20
A 58,000DWT VESSEL WAS FIXED DELIVERY SINGAPORE TRIP VIA INDONESIA, RE-DELIVERY WC INDIA, AT $4,500 - BALTIC BRIEFING
Capesize
The tide turned this week for the Capesize market, as voyage rates registered dramatically falling fuel costs. This was led primarily ...
Sunday, 26 April 20
STRONGER BUNKER PRICES FAIL TO RALLY FREIGHT MARKET - FIS
VLSFO bunker prices rebounded by $22.50 to $229/mt in the port of Singapore but failed to turn around the spot freight market.
Some ...
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- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Planning Commission, India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- The University of Queensland
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- PTC India Limited - India
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
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