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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Thursday, 27 May 21
CHINA POWER DEMAND EXCEEDS PRE-COVID-19 LEVELS; THERMAL OUTPUT STRONG - FITCH RATINGS
Rising Consumption: Total power consumption rose by 21.2% yoy to 1,921.9GWh in 1Q21 due to the fast recovery of China’s economy, after a drop ...
Thursday, 27 May 21
CHINA'S POWER DEMAND EXCEEDS PRE-PANDEMIC LEVELS; RENEWABLES TO DRIVE DEVELOPMENT - FITCH RATINGS
China's power consumption exceeded the pre-Covid-19 levels in 1Q21 due to the country's fast economic recovery, with strong output from the ...
Wednesday, 26 May 21
THE INDONESIA COAL PRICE REFERENCE FOR MAY 2021 SETTLES AT US$ 89.74 PER TON
COALspot.com: The Indonesia coal price reference for May 2021 settles at US$ 89.74 per ton FOB vessel.
The Indonesia coal pric ...
Wednesday, 26 May 21
MARKET INSIGHT - INTERMODAL
Last year crude tankers’ newbuilding contracting activity was devastated by the economic effects of the Covid-19 pandemic and the cloud of un ...
Wednesday, 26 May 21
NEW POWER AND ENERGY MASTER PLAN MUST BE DESIGNED IN BANGLADESH'S BEST INTERESTS, NOT JAPAN'S - IEEFA
JICA must deliver a low or zero emissions plan as promised, not fund Matarbari 2 coal plant
Clear understandings from the Bangladesh ...
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- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- The University of Queensland
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- PTC India Limited - India
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
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