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