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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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Thursday, 24 October 19
PANAMAX: NEGATIVE SENTIMENT IN THE MARKET AS IT CONTINUES TO WEAKEN - FEARNLEYS
Capesize
The market has continued to slide the last week, as lack of fresh requirements and a slight oversupply of tonnage heading towards Sout ...
Wednesday, 23 October 19
CHINA'S 2019 COAL IMPORTS SET TO RISE MORE THAN 10%: ANALYSTS - REUTERS
China, the world’s top coal buyer, is on track to boost imports of the fuel by more than 10% this year, traders and analysts said on Tuesday, ...
Wednesday, 23 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
Moving closer to the end of the year, we are facing what the market was expecting for quite a while, the ship repair sector booming with the shipya ...
Tuesday, 22 October 19
DRY BULK: DESPITE THE DOWNWARD CORRECTION NOTED OVER THE PAST MONTH, RATES ARE STILL HOLDING OFF AT FAVORABLE LEVELS - ALLIED SHIPPING
Despite the downward correction that has been noted in the dry bulk market over the past month, rates are still holding off at favorable levels. Ev ...
Monday, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
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- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Parliament of New Zealand
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
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