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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, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
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- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Minerals Council of Australia
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Wilmar Investment Holdings
- White Energy Company Limited
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- ASAPP Information Group - India
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
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