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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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- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Bhatia International Limited - India
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
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