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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, 13 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
If there is one word that can describe the current shipping environment then that this word is most probably “volatility.” The sentimen ...
Saturday, 09 February 19
SUPRAMAX: A 63,000-TONNER WAS REPORTED FIXED DELIVERY FOR AN EAST KALIMANTAN TRIP, REDELIVERY WEST COAST INDIA, AT $9,250 - THE BALTIC BRIEFING
Cape
The Vale disaster weighed heavily on the market for big ships, with uncertainty about shipments/future exports leading to a sharp drop in ...
Friday, 08 February 19
LOWER-QUALITY INDONESIA EXPORTS ROSE 39 MT IN 2018 YOY PRIMARILY IN RESPONSE TO INCREASED DEMAND FROM CHINA AND INDIA - PEABODY
"Underlying seaborne met and thermal coal conditions remain quite positive and the pace of U.S. coal-fueled power plant retirements is expecte ...
Thursday, 07 February 19
QATAR CAN GAIN FROM DECLINING COAL - THE PENINSULA
With North America and Europe closing down their old coal and nuclear plants, major gas exporters like Qatar can and should gain market share. With ...
Wednesday, 06 February 19
FEBRUARY 2019 INDONESIA'S COAL REFERENCE PRICE FELL 8.83 PERCENT YOY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
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- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Deloitte Consulting - India
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Australian Coal Association
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
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