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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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Monday, 24 December 18
DRY BULK MARKET: CAPESIZE MARKET ON BACKFOOT AS 2018'S END DRAWS NEAR - THE BALTIC BRIEFING
Capesize
Panic set in in the East as the holiday season approaches, with owners chasing rates lower. Rates on the key West Australia/China route ...
Friday, 21 December 18
4.2 MILLION DWT OF DRY BULK SHIPS SCRAPPED UNTIL 17 DEC, DOWN 71.6% Y/Y - BIMCO
2018 has been a slow year for dry bulk demolitions, with only 4.2 million DWT scrapped (as of 17 December), down 71.6% compared to last year. An al ...
Thursday, 20 December 18
INDONESIAN COAL PRICES DIVERGE FROM KEY BENCHMARK - FITCH RATINGS
The Newcastle 6,000kcal coal price benchmark that is widely used to determine most coal price estimates for Indonesian coal miners has increasingly ...
Wednesday, 19 December 18
CHINA'S IMPORT RESTRICTIONS ON COAL SPOILS THE PARTY FOR PANAMAXES - DREWRY
The Chinese government’s objective of suppressing coal and lignite imports in November and December 2018 is adversely impacting demand for Pa ...
Wednesday, 19 December 18
GLOBAL COAL DEMAND SET TO REMAIN STABLE THROUGH 2023, DESPITE HEADWINDS - IEA
While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as decli ...
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- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- Planning Commission, India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- The University of Queensland
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
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