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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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Monday, 03 February 20
KOWEPO INVITING BIDS FOR 2.46 MILLION TONS OF MIN.5700 AND MIN.5600 NCV COAL
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for total 2,460,000 tons of (Sub) Bitum ...
Sunday, 02 February 20
NOVEL CORONAVIRUS OUTBREAK IN CHINA - STANDARD CLUB
Members will be aware of the recent novel coronavirus outbreak in China, which has now been declared a global emergency by the World Health Organis ...
Sunday, 02 February 20
SUPRAMAX: A 52,000DWT SHIP WAS FIXED BASIS DELIVERY SOUTH KALIMANTAN TRIP TO INDIA, AT $6,000 - BALTIC BRIEFING
Capesize
The week proved conspicuous for all the wrong reasons. This was the week when the Baltic Capesize Index (BCI) turned negative, closing ...
Saturday, 01 February 20
50 MILLION PEOPLE QUARANTINED IN CHINA TO CONTAIN SPREAD OF CORONAVIRUS - HOW DOES IT AFFECT SHIPPING? - BIMCO
The outbreak of the novel coronavirus, declared a global health emergency by the WHO, has caused massive uncertainty across the global markets with ...
Saturday, 01 February 20
THERMAL COAL MARKETS: 5 TRENDS TO WATCH OUT FOR IN 2020 - MINING REVIEW
The seaborne thermal coal market entered the year challenged by low priced LNG in the Atlantic and rapidly increasing supply in the Pacific.
&n ...
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- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- GMR Energy Limited - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- The University of Queensland
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- ASAPP Information Group - India
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
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