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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
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- Economic Council, Georgia
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- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
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- Deloitte Consulting - India
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- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Australian Coal Association
- Indian Energy Exchange, India
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- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
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- Attock Cement Pakistan Limited
- Planning Commission, India
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- Bangladesh Power Developement Board
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
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- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
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- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
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- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
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- Holcim Trading Pte Ltd - Singapore
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
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- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
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- Grasim Industreis Ltd - India
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- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
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- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
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- Siam City Cement PLC, Thailand
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- Chamber of Mines of South Africa
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- International Coal Ventures Pvt Ltd - India
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