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