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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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Wednesday, 05 February 20
CORONAVIRUS AND THE SHIPPING INDUSTRY - WATSON, FARLEY & WILLIAMS
The continued spread of Coronavirus and governmental measures to minimise the impact is likely to affect the shipping industry and supply chain.
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Wednesday, 05 February 20
INDONESIA'S COAL PRICE REFERENCE UP 1.46% IN FEBRUARY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Wednesday, 05 February 20
MARKET INSIGHT - INTERMODAL
The oil and gas industry benefitted from a strong and solid ground in the previous year. We witnessed a slow but steady increase in bunker’s ...
Wednesday, 05 February 20
RUSSIA EXPORTED 28.6 MLN TONNES OF LNG IN 2019 - REFINITIV
A lot of attention has been paid recently on the surge in LNG exports from the United States. However, another country which is seeing truly expone ...
Tuesday, 04 February 20
CAPE: THE AVERAGE EARNINGS PER DAY FELL BENEATH THE USD 4,000, A LEVEL CONSIDERABLY BELOW EVEN THE MOST CONSERVATIVE OPEX LEVELS - ALLIED
The recent slump in the dry bulk freight market may well have been expected to some degree, but despite this the shock was still overwhelming when ...
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- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Goldman Sachs - Singapore
- The University of Queensland
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
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