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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, 18 February 20
CORONAVIRUS AND ITS IMPACT ON YOUR CONTRACT - CAN YOU RELY ON 'FORCE MAJEURE'? - INCE
KNOWLEDGE TO ELEVATE
On 30 January 2020, the World Health Organization (WHO) declared that the outbreak of the Novel Coronavirus (officially t ...
Monday, 17 February 20
IMO-2020 SULPHUR CAP - ISSUES TO CONSIDER PRIOR TO THE IMPLEMENTATION OF THE CARRIAGE BAN ON 1 MARCH 2020 - STANDARD CLUB
With the IMO 2020 global sulphur cap now in force, members should bear in mind another significant date in relation to the ‘carriage ban&rsqu ...
Monday, 17 February 20
COVID-19: THE EFFECT OF THIS PUBLIC HEALTH EMERGENCY ON CHARTERPARTY TERMS - GARD
KNOWLEDGE TO ELEVATE
Is it useful to compare the COVID-19 with earlier disease outbreaks?
A comparison with the Ebola outbreak ...
Saturday, 15 February 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - REUTERS
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Saturday, 15 February 20
CHEN ZHIDA: NOVEL CORONAVIRUS - IMPLICATIONS FOR CHARTERPARTIES - SHIPOWNERS' CLUB
KNOWLEDGE TO ELEVATE
Last month, the Club issued a bulletin on the 2019 Novel Coronavirus (COVID-19) which explained the origin of the virus a ...
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- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Australian Coal Association
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Indika Energy - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Planning Commission, India
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
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