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