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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, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- White Energy Company Limited
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Planning Commission, India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
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