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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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Sunday, 23 February 20
SHIPPING INDUSTRY FACES $370 MILLION HIT FROM NEW PANAMA CANAL CHARGE - REUTERS
A new “freshwater” charge that came in this month to help the Panama Canal cope with climate change will cost the shipping industry up ...
Sunday, 23 February 20
A 57,000DWT SHIP FIXING DELIVERY SOUTH KALIMANTAN TRIP, REDELIVERY CJK, AT $7,600 - BALTIC BRIEFING
Capesize
The Capesize market found little to cheer about this week as it again endured remarkable lows. The Atlantic continued to improve, with ...
Saturday, 22 February 20
THE SURPRISING MOVE IN MARINE FUEL SPREADS - ING
Middle distillates tank
One of the biggest surprises since the implementation of new International Maritime Organization (IMO) sulphur regulati ...
Friday, 21 February 20
CAPE: AVERAGE NOMINAL DAILY EARNINGS STILL ADMITTEDLY UNCHANGED W-O-W AT BELOW US$3000 - FEARNLEYS
CAPE
The worst may just about be over for the big ships. Average nominal daily earnings still admittedly unchanged w-o-w at below US$3k, but sent ...
Friday, 21 February 20
INDIA: POTENTIAL INVESTORS SEEK MORE CLARITY ON COMMERCIAL COAL MINING NORMS - FINANCIAL EXPRESS
Potential private investors have sought more clarity on the pricing mechanism proposed for the much-anticipated auction for commercial coal mining. ...
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- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
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