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