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