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