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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, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of ...
Friday, 20 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 20 March 20
OIL PRICES COULD FALL BELOW ZERO: ANALYST - FOX BUSINESS
Plunging oil prices could be headed a lot lower – possibly below zero, according to one Wall Street analyst.
West Texas Interm ...
Friday, 20 March 20
84% OF FEBRUARY BUNKER SALES IN SINGAPORE ARE LOW-SULPHUR FUELS - BIMCO
Low-sulphur fuels accounted for 84% of total February sales in Singapore, slightly up from 83% in January. The sale of low-sulphur fuel oil (LSFO) ...
Thursday, 19 March 20
A CRUDE TSUNAMI: UP TO 3 MILLION BPD OF EXTRA OIL CAN HIT THE MARKET FROM APRIL, MORE COMING IN MAY - RYSTAD ENERGY
The extra oil coming into the global market from April will be as much as 3 million barrels per day (bpd), Rystad Energy estimates. Two million bpd ...
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- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
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