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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, 29 October 18
SUPRAMAX: THE ASIAN AREA SAW FALLING RATES, WITH A 61,000DWT FIXING DELIVERY KOHSICHANG TRIP VIA INDONESIA, REDELIVERY INDIA, AT $10,500 - BALTIC BRIEFING
Capesize
A market of two halves for most of the week with rates in the Atlantic firming and easing in the East for most of the week, but then, ...
Friday, 26 October 18
SHIP OPERATING COSTS EXPECTED TO RISE IN 2018 AND 2019 - MOORE STEPHENS
Total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey.
...
Friday, 26 October 18
SEVERAL CONTRACTIONS IN GLOBAL STEEL PRODUCTION - JEFFREY LANDSBERG
World Steel Association data released today shows that global crude steel production totaled approximately 151.7 million tons in September. T ...
Thursday, 25 October 18
WHAT DOES THE "IMO 2020" REGULATION REALLY SAY? A QUICK GUIDE - BIMCO
KNOWLEDGE TO ELEVATE
The shipping industry has all eyes firmly fixed on the topic, but what exactly do the “IMO 2020” global sulph ...
Wednesday, 24 October 18
MARKET INSIGHT - NASSOS SOULAKIS
Looking at 2018 SnP activity, it is evident that Greek, Chinese and North European (German and Norwegian) owners are the top buying nationalities, ...
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- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
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