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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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Thursday, 12 August 21
ONLY 3 VLCCS SOLD FOR DEMOLITION IN 2021 AS SECONDHAND PRICES TEMPT - BIMCO
During the first seven months of 2021, only three actively trading Very Large Crude Carriers (VLCCs) have been sold for demolition. The current mar ...
Wednesday, 11 August 21
U.S: EIA EXPECTS COAL EXPORTS TO TOTAL 90 MMST IN 2021, 30% INCREASE FROM 2020
Coal production in EIA's forecast totals 607 million short tons (MMst) in 2021, an increase of 13% over 2020.
EIA is also ...
Wednesday, 11 August 21
MARKET INSIGHT - INTERMODAL
Energy is at the core of the global climate dialogue as the climate challenge is essentially an energy challenge. Policy experts around the world a ...
Tuesday, 10 August 21
34 INDONESIAN COAL COMPANIES TEMPORARILY BANNED FOR COAL EXPORTS
The Ministry of Energy and Mineral Resources (ESDM) has imposed sanctions in the form of a coal export ban for 34 coal companies as reported by CNB ...
Monday, 09 August 21
AIIB MAY OFFICIALLY END COAL FINANCING IN 2022 - CHINA DAILY
The Asian Infrastructure Investment Bank may officially rule out coal projects if it updates its energy strategy next year, after shunning funding ...
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- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Parliament of New Zealand
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- PTC India Limited - India
- ASAPP Information Group - India
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Economic Council, Georgia
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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