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