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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, 25 December 19
EXHAUST GAS CLEANING SYSTEMS (SCRUBBER) GUIDANCE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
In a few weeks, IMO’s ‘global sulphur cap’ will take effect. The permitted levels of SOx in ship emissi ...
Wednesday, 25 December 19
INDONESIAN BUKIT ASAM TARGETS TO MINE 30 MLN T OF COAL IN 2020 - REUTERS
Indonesian state-owned coal miner PT Bukit Asam targets to produce around 30 million tonnes of coal in 2020, compared with an estimate of 28.5 mill ...
Wednesday, 25 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As another year in the shipping industry is coming to an end, it is interesting to look at the dry bulk and tanker markets and how these performed ...
Monday, 23 December 19
VLSFO PRICING & AVAILABILITY NEEDS CAREFUL WATCHING - INTEGR8 FUELS
As we approach January 1st 2020 , the VLSFO price premium to HSFO has widened considerably
We are clearly well into the IMO 2020 transition; ch ...
Sunday, 22 December 19
NMDC DIVERSIFIES INTO COAL MINING - THE HINDU
Iron ore mining major NMDC has been allocated two coal blocks in Jharkhand for commercial mining by the Union Ministry of Coal.
Both ...
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- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- The University of Queensland
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
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