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