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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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Tuesday, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
Tuesday, 28 September 21
THE MAIDEN EDITION OF DIVE TECHNOLOGY SUMMIT 2021 CONCLUDES SUCCESSFULLY
Press Release: DIVE TECHNOLOGY SUMMIT 2021, a one-day conference on the recent technological advancements in the Industrial Diving industry conclud ...
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- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Australian Coal Association
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- The University of Queensland
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
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