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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, 22 July 22
MARKET INSIGHT - INTERMODAL
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Friday, 22 July 22
YANCOAL AUSTRALIA CUTS 2022 COAL OUTPUT VIEW AS FLOODS, COVID BITE - REUTERS
Coal miner Yancoal Australia Ltd YAL.AX cut its 2022 output forecast on Wednesday, signalling a hit from higher-than-expected rainfall, COVID-19-le ...
Wednesday, 20 July 22
BOOST FOR BIOFUELS AS IMO REMOVES REGULATORY HURDLE - GARD
MARPOL Annex VI regulations were written for petroleum derived fuels but also apply to biofuels. It has been a challenge to meet the regulatory req ...
Wednesday, 20 July 22
INDONESIA’S COAL EXPORTS TO THE EU INCREASED SIGNIFICANTLY RECENTLY
European countries have increased coal imports from Indonesia due to the energy crisis that hit the region after Russia cuts gas exports to Europe. ...
Tuesday, 19 July 22
DRY BULK MARKET: CAPESIZE MARKET FIRMS THIS WEEK - BALTIC EXCHANGE
Capesize
Firmer sentiment across both basins pushed the Capesize 5TC route average above the $20,000 threshold this week, closing at $24,209. A ...
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- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- MS Steel International - UAE
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
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