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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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Tuesday, 16 October 18
A PRACTICAL OVERVIEW OF THE IMO 2020 SULPHUR CAP - CLYDE&CO
KNOWLEDGE TO ELEVATE
With less than eighteen months before Regulation 14.1.3 of Annex VI of the MARPOL Convention comes into effect, there are ...
Saturday, 13 October 18
SUPRAMAX: SIGNIFICANT ACTIVITY IN THE INDIAN OCEAN WAS EVIDENT AND RATES JUMPED - BALTIC BRIEFING
Capesize
A sharp reversal of fortunes for the big ships as the week closed after a depressed beginning. To start with drops were sudden, with t ...
Wednesday, 10 October 18
SHIPPING MARKET INSIGHT - ILIAS M. LALAOUNIS
During the end of last month the BHSI was hovering around 630 points, while the last observed sale on a 10-yr old Japanese Handy was the M/V Van Im ...
Monday, 08 October 18
INDONESIAN THERMAL COAL PRICE REFERENCE FELL 3.74% IN OCTOBER 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Monday, 08 October 18
KOMIPO INVITES BIDS FOR 520,000 TONS OF COLOMBIAN ORIGIN OF 5,700 NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 520,000 MT of min. 5700 NAR coal of Colombian origin ...
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- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Planning Commission, India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- The University of Queensland
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
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