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