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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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Saturday, 07 December 19
SOUTH AFRICAN COAL PRICE SURGE, WHILE OTHERS LANGUISH, IS TROUBLING - REUTERS
Coal prices around the world are gently sliding as demand from top importers such as China, India and even Europe remains subdued amid a so far mil ...
Saturday, 07 December 19
SUPRAMAX: OVERALL, THE BALTIC SUPRAMAX INDEX REMAINED IN POSITIVE MODE, DESPITE SOME AREAS LACKING FRESH ACTIVITY - BALTIC BRIEFING
Capesize
This week the Capesize market maintained healthy earnings, as an end of year surge took the Capesize 5TC back up to $25,202 by mid-wee ...
Friday, 06 December 19
INDONESIA COAL BENCHMARK PRICE FOR DECEMBER INCREASES BY US 3 CENTS MOM
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 December 19
IMO 2020 IS ABOUT TO GET REAL - GAVIN THOMPSON
As I write this edition of the APAC Energy Buzz from my desk in Singapore I can see ships. Lots of ships. No surprise given that Singapore is among ...
Wednesday, 04 December 19
FITCH RATINGS: CASH FLOW GENERATION TO SLOW DOWN FOR INDONESIAN COAL MINERS
Fitch Ratings' negative outlook on the Indonesian coal-mining sector reflects our view of weaker cash flow generation on account of declining c ...
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- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
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