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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, 01 November 20
GRADUAL RECOVERY FOR INDONESIAN COAL FROM 4Q20; RISKS REMAIN - FITCH RATINGS
Fitch Ratings expects the credit metrics of Indonesian coal miners and coal contractors to improve from 4Q20 with the recovery in volumes and price ...
Wednesday, 28 October 20
BIODIESEL - NEW FUELS, NEW CHALLENGES - GARD | DNV GL
KNOWLEDGE TO ELEVATE
One of numerous possible ways to comply with the IMO’s strategy on the reduction of greenhouse gas (GHG) emissions ...
Wednesday, 28 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.94 points Monday, up 0.35 percent week on week.
The index, released by China ...
Wednesday, 28 October 20
MARKET INSIGHT - INTERMODAL
The global strive towards eco-friendliness and environmental sustainability in the shipping industry is mounting. There are currently almost 200 co ...
Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
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- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- White Energy Company Limited
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- PTC India Limited - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
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