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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, 29 January 19
CHINA HAS BEEN THE TOP DRIVER OF GLOBAL GROWTH FOR NEARLY TWO DECADES - ALLIED
China has been the top driver of global growth for nearly two decades now, pushing demand for seaborne trade and being the key influencer for deman ...
Saturday, 26 January 19
SUPRAMAX: NICKEL ORE RUNS SAW A 56K DWT VESSEL, DELIVERY PHILIPPINES, FIXED FOR A TRIP TO CHINA AT $6K - BALTIC BRIEFING
Capesize
A week of dashed hopes for owners as the optimism evident the previous week evaporated. Rates slipped on all routes and underlying thr ...
Thursday, 24 January 19
ANOTHER DISAPPOINTING WEEK FOR PANAMAX OWNERS; MARKET CONTINUES DOWN IN BOTH BASINS - FEARNLEYS
Capesize
The week has been marked by low activity and dropping rates in both basins. As usual, supply additions have increased at the beginning ...
Thursday, 24 January 19
KOREA SOUTHERN POWER INVITED BIDS FOR 960K MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
Tuesday, 22 January 19
9TH GLOBAL MANUFACTURING SUPPLY CHAIN INNOVATION SUMMIT 2019
Rethinking the supply chain in manufacturing is a must at the digital era along with the industry transforming and innovating; new manufacturing is ...
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- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- The University of Queensland
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Central Electricity Authority - India
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