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