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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, 15 May 19
SHIPPING MARKET INSIGHT - THEODORE NTALAKOS
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Monday, 13 May 19
INDONESIAN COAL PRICE REFERENCE CONTINUES TO FALL
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SUPRAMAX: SOUTHEAST ASIA THE MARKET SAW BETTER DEMAND - BALTIC BRIEFING
Cape
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Thursday, 09 May 19
DEEP OFFSHORE SOUTHEAST ASIA CONGRESS 2019
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Event Date:2-3th July. 2019t
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Sarawak Shell Berhad (S ...
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Event Date: 4-5th July. 2019t
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Hess announced a new d ...
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- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- CNBM International Corporation - China
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Planning Commission, India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
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