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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, 05 December 18
WORLD COAL PRICES FALL, WITH INDONESIA BENCHMARK FOR DECEMBER, ENDING AT LOWEST SINCE JUNE 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 05 December 18
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
Is the rise in crude carrier rates driven only by seasonality, or is the recent positive reversal signaling the end of challenging days for the mar ...
Monday, 03 December 18
WCA'S ENGAGEMENT AT COP24 IN KATOWICE - WCA
The 24th Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) will take place from the 2-14 December 2018 in K ...
Monday, 03 December 18
SUPRAMAX: FIXED DELIVERY KALIMANTAN TO WEST COAST INDIA, AT $11000 - THE BALTIC BRIEFING
Capesize
A roller-coaster week for the big ships with hopes soaring at the start for a mini last quarter revival, only to be dashed as the week ...
Sunday, 02 December 18
TRADE WAR LEADING TO HEADWINDS FOR THE FRAGILE DRY BULK RECOVERY - PETER SAND, BIMCO
The first twelve weeks of the 2018/19 marketing year, which started on 1 September 2018, have painted a dire picture for US soya bean exports which ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- The University of Queensland
- Orica Australia Pty. Ltd.
- Australian Coal Association
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
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