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