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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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Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
Wednesday, 17 October 18
SHIPPING MARKET INSIGHT - TIMOS PAPADIMITRIOU
In the last three months approximately 72 tankers changed hands involving ships larger than 33kdwt up to VLCC. 43 of those vessels had to do ...
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- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
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