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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, 24 October 18
CHINESE POWER PLANT STOCKPILES AT HIGHEST LEVEL SINCE 2015 - JEFFREY LANDSBERG
Chinese power plant coal stockpiles have climbed to approximately 83.3 million tons as of the middle of this month, said Jeffrey Landsberg in his e ...
Tuesday, 23 October 18
WILL THE U.S. COAL DECLINE CONTINUE? - FORBES
What’s Trump’s new coal proposal?
Adding to its controversial plan to leverage federal authority to keep retiring baselo ...
Monday, 22 October 18
CONTINUED HIGH LNG PRICES; TRADE WAR IMPACT LIMITED - FITCH RATINGS
Fitch Ratings expects sustained high spot liquefied natural gas (LNG) and contract prices over the next two quarters on limited investment in LNG e ...
Monday, 22 October 18
WINTER OIL MARKET OUTLOOK - OPEC
The oil market in the winter season is generally characterized by demand for diesel, particularly in the northern hemisphere, leaving product marke ...
Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
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- Siam City Cement - Thailand
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- The University of Queensland
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Posco Energy - South Korea
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Aditya Birla Group - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
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