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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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- Malabar Cements Ltd - India
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- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
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- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- ASAPP Information Group - India
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- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Australian Coal Association
- Central Electricity Authority - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- The University of Queensland
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
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