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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
Wednesday, 30 September 20
MARKET INSIGHT - INTERMODAL
Spot rates for Capesize bulk carriers received a significant boost last week, however, there are certain reservations in the market regarding the p ...
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- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
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