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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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Sunday, 13 December 20
LONGSTANDING DOWNSIDE RISKS TO TRADE OUTLOOK - BALTIC EXCHANGE
The OECD has attempted to put a positive spin on the trade message emanating from its latest economic outlook, released last week.
The ...
Sunday, 13 December 20
INDONESIA COAL OUTPUT AT 514 MILLION TONNES THIS YEAR, 2021 TARGET UNCHANGED - REUTERS
Indonesia coal output in the period to Dec. 10 stood at 514.2 million tonnes, official data from the energy ministry’s website showed.
&n ...
Thursday, 10 December 20
MALAYSIA'S CIMB ANNOUNCES COAL FINANCING PHASE-OUT BY 2040 AS ASIA'S FOSSIL FUEL DIVESTMENT DRIVE ACCELERATES - IEEFA
The first emerging markets bank to announce a progressive coal exit policy
Malaysia’s CIMB Group Holdings (CIMB) has announced ...
Wednesday, 09 December 20
MARKET INSIGHT - INTERMODAL
Heading towards the end of a difficult year and with the entire planet under the shadow of the covid-19 virus, it is interesting to proceed with a ...
Tuesday, 08 December 20
MARKET ANALYSIS - ALLIED SHIPPING
It is now undisputed that oil consumption for 2020 will post a considerable drop, as demand for several petroleum products has plummeted since the ...
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- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- London Commodity Brokers - England
- Parliament of New Zealand
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- The University of Queensland
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
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