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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, 21 November 18
SHIPPING MARKET INSIGHT - DIMITRIS KOURTESIS
Halfway through the fourth and last quarter of the year, we spot a significant change in freight rates for tankers trading dirty, as well as on the ...
Tuesday, 20 November 18
FREIGHT RATES IN THE CRUDE OIL MARKET HAVE ALREADY PICKED UP OVER THE PAST COUPLE OF WEEKS - YIANNIS VAMVAKAS
Current geopolitical developments between Iran and the US, which have led the latter to re-impose its sanctions, have significantly affected oil pr ...
Tuesday, 20 November 18
GOLDEN ENERGY AND RESOURCES LEADS A$249M BID FOR AUSTRALIA-LISTED STANMORE COAL - THE STRAITS TIMES
Singapore-listed Golden Energy and Resources (GEAR) is leading deals worth up to A$249 million (S$250 million) to acquire Australia-listed Stanmore ...
Monday, 19 November 18
INDONESIA'S LEADING EIGHT COAL MINER'S COAL MINING CONTRACTS ARE EXPECTED TO EXPIRE BETWEEN YEAR 2019 - 2025
The Ministry of Energy and Mineral Resources (ESDM) said, eight Coal Contract of Works (CCoW) will expected to expire between 2019 to 2026, Liputan ...
Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
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- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
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