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