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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Thursday, 03 January 19
CAPESIZE: A MORE POSITIVE START OF THE NEW YEAR THAN EXPECTED FOR THE BIG SHIPS - FEARNLEYS
Capesize
A more positive start of the new year than expected for the big ships, with average gains of US$ 500/day posted on the first tra ...
Tuesday, 01 January 19
INDONESIA: COAL PRODUCTION EXPECTED TO EXCEED THIS YEAR'S TARGET - JP
Indonesian coal production reached 456 million tons up to Thursday or 94.02 percent of this year’s total target of 485 million tons, accordin ...
Monday, 31 December 18
THE INDONESIAN COAL MARKET Q1 '19 FORECAST: LOOKS DIRECTIONLESS - TRADER
The Indonesian coal market looks directionless, an International coal trader said when we asked him to give his forecast for 1Q' 2019.
...
Monday, 31 December 18
GLOBAL COAL DEMAND GREW BY 1% IN 2017; GLOBAL COAL POWER GENERATION INCREASED BY OVER 250 TWH - IEA
After two years of decline, global coal demand grew by 1% in 2017 to 7585 Mt as stronger global economic growth increased both industrial output an ...
Sunday, 30 December 18
MAJOR LNG BUYERS' UNCONTRACTED DEMAND TO QUADRUPLE BY 2030 - WOOD MACKENZIE
Wood Mackenzie’s latest research reveals that uncontracted demand by the world’s seven largest LNG buyers could quadruple to 80 million ...
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- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- VISA Power Limited - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
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