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