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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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Friday, 25 November 22
APAC THERMAL COAL PRICES CORRECT FROM RECORD HIGH - FITCH RATINGS
Prices of Newcastle 6,000kcal/kg coal have corrected following falling European gas and coal prices, and more supply from Australia could help miti ...
Thursday, 24 November 22
VIETNAM BOOSTS COAL USE PLAN FOR 2030 AS G7 CLIMATE OFFER STALLS - REUTERS
Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen by Reuters show, while renewables ...
Tuesday, 22 November 22
THE GENCON 2022 CHARTERPARTY - GARD
KNOWLEDGE TO ELEVATE
BIMCO has published a revamped version of the popular GENCON charterparty. Our author, Helena Biggs, was a member of the ...
Tuesday, 22 November 22
INDIA POWER BINGES ON COAL, OUTPACES ASIA - REUTERS
India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine ...
Friday, 18 November 22
REALITIES OF LOI LIABILITIES - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
The cargo misdelivery claim in Trafigura Maritime Logistics Pte Ltd v. Clearlake Shipping Pte Ltd (Miracle Hope) [2022] E ...
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- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- The University of Queensland
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- PTC India Limited - India
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