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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 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
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- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
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