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