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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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Thursday, 19 March 20
BIMCO REVISES 2020 FORECAST FOR MAIN SHIPPING MARKETS
The coronavirus pandemic is impacting global shipping demand for 2020 negatively. The speed of the virus spread makes it difficult to assess the fu ...
Thursday, 19 March 20
U.S. COAL EXPORTS DECLINED IN 2019 - EIA
In 2019, U.S. coal exports declined to 93 million short tons (MMst), a 20% decrease from the previous year, according to the U.S. Energy Informatio ...
Thursday, 19 March 20
SOUTH KOREA'S KOSPO INVITED BIDS FOR MIN 3,700 OR MIN 4,200 NCV LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO), has issued an international tender for total 160,000 MT (±10%) (80,000 x 2 Panamax) of ...
Wednesday, 18 March 20
DRY BULK: INDONESIAN COAL CARGOES PROVIDING A BIG BOOST IN THE EAST WHERE SENTIMENT FOR HANDIES ALSO STARTED IMPROVING - INTERMODAL
The BDI ended last week with small gains on the back of an encouraging number of cargoes out of key trading regions that helped sustain the reserve ...
Wednesday, 18 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
Despite we all knew about the Covid-19 weeks ago, few could realize the size of the thread until the last few days. The examples of China and Italy ...
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- Uttam Galva Steels Limited - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
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- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
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- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
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- Agrawal Coal Company - India
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- McConnell Dowell - Australia
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- Thai Mozambique Logistica
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- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
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- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
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- Merrill Lynch Commodities Europe
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
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- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Global Business Power Corporation, Philippines
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- Romanian Commodities Exchange
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- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
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- Anglo American - United Kingdom
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Indian Energy Exchange, India
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- Mintek Dendrill Indonesia
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- Therma Luzon, Inc, Philippines
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- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
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- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
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- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
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- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
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- Petron Corporation, Philippines
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- Kohat Cement Company Ltd. - Pakistan
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- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
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- Bangladesh Power Developement Board
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