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