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