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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, 30 November 19
PANAMAX: LEVELS IMPROVED IN THE PACIFIC MARKET TOO WITH $11,000 BEING CONCLUDED ON AN 81,000DWT SHIP FOR AN INDONESIA TO CHINA COAL TRIP - BALTIC BRIEFING
Capesize
The market has been well supported over the past week, led primarily by the Atlantic Basin. After bottoming last week, sentiment was s ...
Friday, 29 November 19
FITCHRATINGS MAINTAINS NEGATIVE 2020 OUTLOOK ON SHIPPING, AS TIGHTER SUPPLY HELPS, BUT SOFTER DEMAND DRAGS
Fitch’s Sector Outlook: Negative
We maintain a negative sector outlook for global shipping because of the forecast slowdown of ...
Friday, 29 November 19
INDONESIA PRODUCES 390 MLN TONNES OF COAL IN JAN-SEPT: MINISTER - REUTERS
Indonesia’s production of coal for the January-September period was 390 million tonnes, Energy and Mineral Resources Minister Arifin Tasrif s ...
Wednesday, 27 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
As the end of the fourth quarter is approaching, one could say that the wet market has maintained the strong pace observed during the third qu ...
Tuesday, 26 November 19
PREPARATIONS INTENSIFY AS 1 JANUARY 2020 GLOBAL CUT IN SULPHUR IN SHIP'S FUEL OIL LOOMS: IMO
“IMO 2020” requirements for ships to cut sulphur oxide emissions enter into effect in just over one month’s time. This will signi ...
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- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Planning Commission, India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
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