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