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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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Sunday, 22 December 19
TRADING PLACES FOR 2020 - BALTIC EXCHANGE
In the sea of 2020 predictions, Saxo Bank’s Outrageous Predictions sail their own very unique course. For nearly 20 years the Danish investme ...
Saturday, 21 December 19
SUPRAMAX: A 63,000 DWT VESSEL, OPEN CIGADING, FIXED A TRIP VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $8,500 - BALTIC BRIEFING
Capesize
The Capesize market this past week has been attempting to recalibrate itself in consideration of weakening freight levels and increasi ...
Saturday, 21 December 19
SHIPPING'S SUPPLY AND DEMAND TRENDING OFF BALANCE - BIMCO
One of the most worrying trends that has developed recently – which will affect shipping demand in the years to come – is the falling t ...
Friday, 20 December 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 19 December 19
COAL POWER GENERATION CONTINUES TO DECLINE IN GERMANY: DESTATIS, XINHUA REPORTED
The volume of electricity generated in coal-fired power plants in Germany decreased “markedly” by 37 percent to 34 billion kilowatt-hou ...
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- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- White Energy Company Limited
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- The University of Queensland
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
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