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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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Saturday, 06 April 19
SUPRAMAX: IT WAS A POOR WEEK OVERALL FOR THE BALTIC SUPRAMAX INDEX, WHICH LOST GROUND - BALTIC BRIEFING
Capesize
The Capesize market over the past week looked to have found a floor on Tuesday with the BCI 5TC at $3460 before firming into the rest ...
Thursday, 04 April 19
OVERSUPPLY STILL MAJOR CHALLENGE WARNS ICS
Speaking in Istanbul, Simon Bennett, Deputy Secretary General of the International Chamber of Shipping (ICS) warned that avoiding overcapacity and ...
Thursday, 04 April 19
GLENCORE, TOHOKU ELECTRIC SET COAL CONTRACT PRICE AT $94.75/T - SOURCE, REUTERS REPORTED
Global miner Glencore and Japan’s Tohoku Electric Power agreed on a price of $94.75 per tonne for supplies of thermal coal from Australia for ...
Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This i ...
Monday, 01 April 19
AUSTRALIAN COAL AT RISK FROM CHINA MOVE, WARNS GOVERNMENT REPORT - SYDNEY MORNING HERALD
A new government report warns China’s restrictions on coal imports is the number one risk for Australian coal this year and could lead to a s ...
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- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- White Energy Company Limited
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
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