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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, 05 October 22
BUNKER PRICES DOWN AGAIN; IS THERE MORE TO COME? - INTEGR8 FUELS
It’s the economy…..”
VLSFO prices are now back to levels at the start of this year. After all the extremes of thi ...
Wednesday, 05 October 22
MARKET INSIGHT - INTERMODAL
Amid the looming western sanctions on Russia, the country is challenged to pivot its energy markets away from Europe and toward the East. Yet, Russ ...
Tuesday, 04 October 22
A REMARKABLE SHIFT IN FORTUNES HAS BEEN NOTED IN THE CRUDE OIL TANKER MARKETS - ALLIED SHIPPING
A remarkable shift in fortunes has been noted in the crude oil tanker markets over the past month, yet despite these shifts being seemingly in thei ...
Tuesday, 04 October 22
OIL PRICES COULD SOON RETURN TO $100 AS OPEC+ CONSIDERS ‘HISTORIC’ CUT, ANALYSTS SAY - CNBC
An influential alliance of some of the world’s most powerful oil producers is reportedly considering their largest output cut since the start ...
Tuesday, 04 October 22
INDONESIAN COAL PRICE REFERENCE SURGE AGAIN TO RECORD HIGH
COALspot.com: Indonesian Coal Price Reference reached another record high in October as Russia's war in Ukraine continues to spark a surge in c ...
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- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Agrawal Coal Company - India
- PTC India Limited - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- White Energy Company Limited
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
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