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