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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, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
Tuesday, 31 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.43 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.17 points Monday, down 0.43 percent week on week.
The index, released by Chi ...
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- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- PTC India Limited - India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- The University of Queensland
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