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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Friday, 30 November 18
GOVT MULLS REQUIRING MINERS TO TURN COAL INTO GAS - THE JAKARTA POST
The government is considering requiring all coal miners to turn the raw commodity into dimethylether (DME) as a substitute for liquefied petroleum ...
Friday, 30 November 18
SUPRAMAX: N. CHINA TO INDIA OR SE ASIA SUPRAS ARE GETTING PAID AROUND US$ 6000 - FEARNLEYS
Capesize
Sharp rise in spot activity and income, admittedly from very low levels, for the big ships. West Australia/China and Brazil/Far East b ...
Thursday, 29 November 18
NEW IMSBC CODE REQUIREMENTS AIM TO CONTROL LIQUEFACTION OF COAL CARGOES - GARD
KNOWLEDGE TO ELEVATE
The International Maritime Solid Bulk Cargoes (IMSBC) Code describes coal as a natural, solid, combustible material consi ...
Wednesday, 28 November 18
SHIPPING MARKET INSIGHT - GEORGE LAIOS
Last week I had the privilege to attend the SingularityU Greece Summit, in Athens. It was a privilege because you do not often have the chance to s ...
Tuesday, 27 November 18
PANAMAX AND SUPRAMAX INDICES WITNESSED A DECLINE OF JUST BELOW 14% IN THEIR MEAN ON A MONTH-ON-MONTH COMPARISON - ALLIED SHIPPING
A month of sharp corrections and great asymmetries for the dry bulk sector, with the overall overview of the market shipping rapidly from a state o ...
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- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Eastern Coal Council - USA
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
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