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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, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
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- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- The University of Queensland
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- White Energy Company Limited
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
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