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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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Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
...
Saturday, 17 July 21
COAL PRICES TRADE AT DECADE HIGH OF $140 PER TONNE, HERE ARE SOME FACTORS AT PLAY: CNBC-TV18
Coal prices are trading at $140 per tonne. In the last one week, coal has seen more than 8 percent gains; the last one month has seen 24 percent ju ...
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- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
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- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
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- White Energy Company Limited
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- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Planning Commission, India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
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