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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, 01 July 20
MARKET INSIGHT - INTERMODAL
It was beginning of 2020 – close to 6 months from now – when we first experienced the huge impact of the COVID 19 outbreak on Ship Repa ...
Monday, 29 June 20
INDONESIAN COAL AT THE MERCY OF THE DRAGON AND TIGER - GHEE PEH | IEEFA
Coal sector analysts have been busy in recent months mapping the negative impact of low coal prices from the COVID-19 pandemic on Indonesian coal c ...
Monday, 29 June 20
FALLING DEMAND IN CHINA AND INDIA SIGNAL TOUGH TIMES AHEAD FOR INDONESIAN EXPORTS - GHEE PEH | EEFA
Assessing the Impact on Indonesian Coal Companies
The bad news for Indonesia’s coal companies is that they are likely to have ...
Monday, 29 June 20
INDIA COAL IMPORT OUTLOOK: WEAK DEMAND, IMPORT SUBSTITUTION, EXPECT 20% YOY DECLINE - GHEE PEH | IEEFA
For India, the coal demand indicators have clearly turned negative.
According to Argus Media, since the government declared a ...
Monday, 29 June 20
CHINA COAL IMPORT OUTLOOK: MANY MOVING PARTS, FORECAST TO FALL 10% YOY - GHEE PEH | IEEFA
China’s coal demand declined in the first quarter of 2020. According to the China National Coal Association, the country consumed 870mt in th ...
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- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
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- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Deloitte Consulting - India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Planning Commission, India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
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