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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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Wednesday, 11 September 19
THE INDONESIAN COAL PRICE REFERENCE FELL HEAVILY IN SEPTEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 11 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
We are going through one of the rare instances where we see optimism building in the dry bulk industry and, as the momentum is still going, the bel ...
Monday, 09 September 19
INDIAN COMPANIES READY TO INVEST IN DEVELOPMENT OF NEW COAL DEPOSITS IN RUSSIA'S YAKUTIA - TASS
Indian metallurgical companies, which received trial batches of coal from Kolmar mining company, are satisfied with the quality of the products and ...
Monday, 09 September 19
COLOMBIA COAL OUTPUT DOWN YEAR-ON-YEAR IN 2ND QUARTER - REUTERS
Colombia, the world’s fifth-largest exporter of coal, produced 18.9 million tonnes of the fuel in the second quarter, down 4.5% from the same ...
Monday, 09 September 19
ULTRAMAX: ASIA A 58,000-TONNER FIXED DELIVERY FUZHOU, VIA INDONESIA, REDELIVERY CHINA, AT $12,800
Capesize
0px The market reached new heights this week as the 5TC topped $38,014, a level not seen in the sector since 2013. Fridays 5TC closed ...
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- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
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