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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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Saturday, 15 February 20
AFRAMAX: A MORE POSITIVE ATTITUDE EXISTED IN THIS SECTOR WITH RATES IMPROVING ON ALL ROUTES - BALTIC BRIEFING
VLCC
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coron ...
Saturday, 15 February 20
A 56,000DWT VESSEL WAS CONCLUDED BASIS DELIVERY SINGAPORE VIA INDONESIA REDELIVERY CHINA IN THE LOW $6,000S - BALTIC BRIEFING
Capesize
Riding the downward momentum of the previous week, the market was always going to be hard pressed to make any sort of revival. With mu ...
Saturday, 15 February 20
U.S. COAL PRODUCTION WILL TOTAL 595 MMST IN 2020, DOWN 14% FROM 2019 - EIA
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019.
Lower ...
Friday, 14 February 20
WHY THE WORLD ECONOMY WILL BE FACING CHINA'S CORONAVIRUS FOR A LONG TIME - CNBC
Everywhere we look we see the headlines and commentators talking about the coronavirus and its impact on tourism, trade and investment between Chin ...
Friday, 14 February 20
KOWEPO INVITED BIDS FOR 1.275 MILLION TONS OF MIN. 5,600 NCV COAL
COALspot.com: Korea Western Power Co. Ltd (KOWEPO). as a representative of five Korean Gencos has issued an international tender for total 1,275,00 ...
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- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- PTC India Limited - India
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- White Energy Company Limited
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
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