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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, 24 April 19
PANAMAX: IN THE EAST, THE MARKET MOVED SIDE-WAYS, WITH FEWER COAL CARGOES FROM INDONESIA PUTTING PRESSURE ON RATES - INTERMODAL
Sentiment in the Dry Bulk market slowly but steadily kept improving last week as Capesize rates remained in recovery mode and Panamax earnings also ...
Wednesday, 24 April 19
SHIPPING MARKET INSIGHT - IS THIS A BANKERS' MARKET? - INTERMODAL
Over the last 10 years, many of the traditional and top lending banks have made the decision to either downsize their portfolios or even exit shipp ...
Monday, 22 April 19
COAL INDIA TO ASK POWER PLANTS TO CUT COAL IMPORTS - DNA
Co to encourage import substitution with domestic supplies at power plants
Surge in coal imports has now forced Coal India Ltd (CIL) ...
Thursday, 18 April 19
BIMCO SEES HARD TIMES AHEAD FOR CAPESIZES
China’s increased use of scrap metal for its production of crude steel is fundamentally critical to the dry bulk shipping industry. Mostly Ca ...
Wednesday, 17 April 19
ONCE AGAIN WE FACED WITH THE SITUATION OF THE DRY BALTIC INDEX BEING BELOW 1,000 POINTS - INTERMODAL
Once again we are faced with the situation of the Dry Baltic Index being below 1,000 points. In a market where the feeling of insecurity is almost ...
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- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- PTC India Limited - India
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
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