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