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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, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA THREATENS TO REVOKE 2,350 MINING BUSINESS PERMITS
The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
Saturday, 26 June 21
KOSPO INVITED BIDS FOR 480,000 MT OF COAL PER ANNUM
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 480,000 MT of NCV 1 Min. 5,600 (Spec 1) /Min. 5,0 ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- The University of Queensland
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Economic Council, Georgia
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