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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, 16 September 22
DRY BULK MARKET: EU’S BAN ON RUSSIAN COAL LIFTS DEMAND DESPITE ECONOMIC HEADWINDS - BIMCO
Highlights
– The Baltic Exchange Dry Index (BDI) peaked in late May and has since fallen sharply as lower Chinese demand and adverse glob ...
Friday, 16 September 22
BIMCO EMBARKS ON NEW STANDARD FOR “QUIET ENJOYMENT”
KNOWLEDGE TO ELEVATE
A newly set-up BIMCO drafting team involving a cross-section of shipowners, charterers, financing and leasing i ...
Friday, 16 September 22
INDIAN COAL PRODUCTION TO RISE 150 PER CENT IN 10 YEARS: CENTRE - EXPRESS NEWS SERVICE
The Union Ministry of Mines is expecting 150 per cent growth in coal production 10 years down the line as a result of coal reforms that had been us ...
Thursday, 15 September 22
MARKET INSIGHT - INTERMODAL
While the Organization of Petroleum Exporting Countries and its allies agreed on a 100,000 b/d output cut last week, oil flows are in the spotlight ...
Monday, 12 September 22
COAL PRICE HIKE REMAINS DIFFICULT FOR CIL: CHAIRMAN TELLS ANALYSTS - PTI
Coal India on Thursday informed investors that increasing coal prices remains difficult in the current context when the economy is grappling with h ...
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- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Agrawal Coal Company - India
- The University of Queensland
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
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