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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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Tuesday, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
Sunday, 28 April 19
SUPRAMAX: A 54,000DWT VESSEL OPEN GRESIK FIXED VIA AUSTRALIA, REDELIVERY CHINA, IN THE MID $12,000S - BALTIC BRIEFING
Capesize
Following the holidays, activity increased in both the Pacific and Atlantic Basins. The 5TC average rallied, closing at $8,596, up $1, ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
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