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