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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, 07 April 21
MARKET INSIGHT - INTERMODAL
Following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a f ...
Wednesday, 07 April 21
COAL USED TO GENERATE ELECTRIC POWER IN U.S. WILL INCREASE BY 13 PERCENT TO 495 MMST IN 2021 - EIA
EIA expects U.S. coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an addi ...
Wednesday, 31 March 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.12 PCT - XINHUA
China Taiyuan coal transaction price index stood at 139.03 points Monday, up 0.12 percent week on week.
The index, released by China ...
Wednesday, 31 March 21
MARKET INSIGHT - INTERMODAL
Over the past week, the biggest story has been the blockage of the Suez Canal, as a result of the grounding of the container ship Ever Given. At th ...
Monday, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
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- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
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- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- White Energy Company Limited
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
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