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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, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Marubeni Corporation - India
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
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