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