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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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Tuesday, 17 March 20
IT IS NOW UNQUESTIONABLE THAT 2020 WILL BE A MILESTONE YEAR FOR THE OIL MARKET, AS WELL AS THE WHOLE GLOBAL ECONOMY - ALLIED
It is now unquestionable that 2020 will be a milestone year for the oil market, as well as the whole global economy. The impact from the COVID-19 o ...
Tuesday, 17 March 20
PRELIMINARY FIELD EXPERIENCES ON THE EFFECTS OF LSFO AND VLSFO ON CYLINDER CONDITION - HANS JENSEN LUBRICATORS
It is now more than two months since the 0.5% sulphur cap entered into force, which have affected the operation of more than 70,000 vessels. As ant ...
Monday, 16 March 20
ULTRAMAX: S8 INDONESIA-INDIA AND S10 INDONESIA-CHINA ROUTES BOTH POSTED GAINS OF $1,412, AND $1,289 ON THE WEEK, TO CLOSE AT $5,575, AND $6,089 RESPECTIVELY - BALTIC BRIEFING
Capesize
The Capesize market came to work on Monday, with little expectation, or confidence, that the days ahead were going to bring anything o ...
Sunday, 15 March 20
CAPTIVE COAL OUTPUT RISES 19% IN APRIL-FEBRUARY - FINANCIAL EXPRESS
Coal production from captive mines in the first eleven months of the ongoing fiscal have increased by 18.8% year-on-year (y-o-y) to 51.7 million to ...
Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
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- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- The Treasury - Australian Government
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
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