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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, 12 May 21
MARKET INSIGHT - INTERMODAL
Tanker S&P is finally back!
For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...
Monday, 10 May 21
PAKISTAN: COAL GASIFICATION AND LIQUEFACTION HARMFUL TO ECONOMY - IEEFA
There is no second life for coal
Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...
Sunday, 09 May 21
HERE'S WHY INVESTORS ARE POURING MONEY INTO COAL, DESPITE ITS BLEAK FUTURE - FORBES
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...
Sunday, 09 May 21
MAYBANK TO STOP COAL FINANCING - BERNAMA
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.
Currently, coal financing m ...
Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
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- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- The University of Queensland
- Economic Council, Georgia
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
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