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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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Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
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- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- The University of Queensland
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Australian Coal Association
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
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