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