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