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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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Thursday, 09 April 20
SUSPENSION OF WRONGFUL TRADING IN LIGHT OF COVID 19 - WF&W
KNOWLEDGE TO ELEVATE
DIRECTORS’ PERSONAL LIABILITY FOR WRONGFUL TRADING – RELIEF DURING THE CORONAVIRUS CRISIS
As the UK&rsquo ...
Wednesday, 08 April 20
LESSONS LEARNED FROM SCRUBBER INSTALLATION AND OPERATION - ABS
KNOWLEDGE TO ELEVATE
At the beginning of this year, the IMO’s global sulfur cap on marine fuels entered into force and shipowners who ch ...
Wednesday, 08 April 20
MARKET INSIGHT - INTERMODAL
With lockdown measures around the globe tightening during the last weeks of Q1, there is finally a feeling that most countries are slowly but stead ...
Tuesday, 07 April 20
SHIPPING MARKET ANALYSIS - ALLIED
With the first quarter of 2020 now firmly written in the books, it is worth examining what we have witnessed so far in the tanker market. Undoubted ...
Tuesday, 07 April 20
IS CHINA EMBARKING ON A MAJOR EXPANSION OF COAL-FIRED POWER GENERATION? - WOOD MACKENZIE
As energy companies worldwide grapple with the economic impact of the coronavirus pandemic, long-term planning continues. Ahead of the release of t ...
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- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- The University of Queensland
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
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