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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, 24 April 20
CHINA COAL PRODUCER YANZHOU COAL POSTS 9.6 PCT RISE IN 2019 NET PROFIT - XINHUA
China’s major coal producer Yanzhou Coal Mining Co., Ltd. said Thursday that its net profit saw a 9.6 percent rise in 2019.
Th ...
Tuesday, 21 April 20
INDONESIA ACCOUNTS FOR 19% OF JAPAN'S TOTAL COAL IMPORTS - BANCHERO COSTA
Coal trade in Asia is proving remarkably resilient this year, despite the global economic impact from COVID-19.
We have seen China&r ...
Tuesday, 21 April 20
COVID-19: CHARTERPARTY MATTERS FOR SHIPOWNERS - SKULD
KNOWLEDGE TO ELEVATE
Whilst the plight of cruise ships, stranded off shore with sick passengers and crew, may be dominating media headlines, t ...
Monday, 20 April 20
SUPRAMAX: A 52,000DWT SHIP FIXING AN INDONESIA COAL RUN TO CHINA AT $4400 - BALTIC BRIEFING
Capesize
This week was the strongest period seen for the Capesize market in several months. All routes globally succumbed to improved sentiment ...
Friday, 17 April 20
PANDEMIC TO BRING ASIA'S 2020 GROWTH TO HALT FOR 1ST TIME IN 60 YEARS - IMF: REUTERS
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented ...
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- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Economic Council, Georgia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
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