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