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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, 04 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
For yet another time, the market seems to have its own drivers. After a very disappointing first half, the recent recovery in the shipping market i ...
Tuesday, 20 August 19
NORDEN HAS BEEN AWARDED A 3-YEAR CONTRACT FOR THE TRANSPORTATION OF COAL FROM INDONESIA TO HONG KONG
NORDEN has been awarded a 3-year contract with a power company in Hong Kong for the transportation of coal from Indonesia to Hong Kong.
...
Tuesday, 20 August 19
THE AUGUST 2019 INDONESIAN COAL PRICE REFERENCE POSTS THE FIRST MONTHLY GAIN SINCE AUGUST 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Monday, 19 August 19
INDONESIAN COAL RUNS, A 82,000DWT SHIP WAS FIXED DELIVERY CHINA VIA INDONESIA, REDELIVERY JAPAN, IN THE MID $16,000S - BALTIC BRIEFING
Capesize
The Capesize market was buoyant in both basins this week, posting gains across the board. After bottoming out the previous week, rates ...
Sunday, 11 August 19
ULTRAMAX: A 58,000DWT VESSEL OPEN KEMAMAN FIXED FOR TWO TO THREE LADEN LEGS, REDELIVERY SINGAPORE-JAPAN, AT $12,250 - BALTIC BRIEFING
Capesize
With typhoon Lekima gathering pace, numerous China ports were closed by the end of the week and will likely be for two to three days. ...
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- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- The University of Queensland
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
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