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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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Saturday, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
Wednesday, 24 February 21
MARKET INSIGHT - INTERMODAL
With yields of up to 563%, the shares of Greek shipping companies listed on Wall Street are recorded. The Coronavirus pandemic has not significantl ...
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- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
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