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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, 17 August 22
PAXOCEAN, HONG LAM MARINE AND BUREAU VERITAS SIGN MOU TO DEVELOP AMMONIA BUNKER VESSEL DESIGN - BUREAU VERITAS
PaxOcean Engineering Pte. Ltd. has signed a Memorandum of Understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and class ...
Wednesday, 17 August 22
GOODFUELSS ASIA-PACIFIC BRANCH KICKSTARTS SUSTAINABLE BIOFUEL DELIVERIES WITH NYK AS FIRST CLIENT - GOOD FUELS
GoodFuels, the leading biofuels pioneer for the global transport industry, has today announced that it has successfully supplied sustainable marine ...
Tuesday, 16 August 22
EU BAN ON RUSSIAN COAL IMPORTS COMES INTO FORCE - DEUTSCHE WELLE
The European Union banned Russian coal imports in response to the invasion of Ukraine as part of sanctions in April. Since then, it’s been sc ...
Thursday, 11 August 22
MARKET INSIGHT - INTERMODAL
On July 22nd, Ukraine signed a deal with Russia to release 22mn tons of grain from Ukraine’s 3 major ports (Yuzhny, Chornomorsk, Odesa). Such ...
Wednesday, 10 August 22
THE FUTURE OF COAL: EIGHT KEY THEMES FROM THE GLOBAL COAL FORUM - WOOD MACKENZIE
Coal investors face a multi-layered and unavoidable challenge: markets distorted by war, trade constraints and the existential threat of the energy ...
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- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- White Energy Company Limited
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Indian Energy Exchange, India
- The University of Queensland
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
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