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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, 17 October 19
INDIA READIES POLICY TO ATTRACT FOREIGN INVESTMENT IN COAL MINING - REUTERS
India expects to have formulated a policy within the next two weeks to attract foreign investment to its coal mining industry, the country’s ...
Wednesday, 16 October 19
INDIA CALLS FOR A RESET OF CLIMATE DEBATE ON COAL AS A FUEL - LIVEMINT
India on Tuesday called for a reset on climate debate on coal as a fuel, in the backdrop of India becoming one of the top renewable energy producer ...
Wednesday, 16 October 19
LESSONS LEARNT FROM CREW INJURED IN HEAVY WEATHER - UK P&I CLUB COMMENTS
KNOWLEDGE TO ELEVATE
Stuart Edmonston, Loss Prevention at UK P&I Club, discusses an incident in which crew were injured whilst on deck in ...
Wednesday, 16 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
In perhaps the most interesting market conditions of the past years, the tanker and the dry bulk industry have created a positive sentiment with re ...
Tuesday, 15 October 19
INDIA READIES POLICY TO ATTRACT FOREIGN INVESTMENT IN COAL MINING - REUTERS
India expects to have formulated a policy within the next two weeks to attract foreign investment to its coal mining industry, the country's Co ...
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- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Central Electricity Authority - India
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