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