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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, 25 March 20
MARKET INSIGHT - INTERMODAL
There is no doubt that the Covid-19 pandemic crisis is a world-shattering event that will change the world as we know it. Societies are facing chal ...
Wednesday, 25 March 20
INDONESIA TO CANCEL RULES REQUIRING DOMESTIC SHIPS FOR COAL, PALM EXPORTS : REFINITIV
Indonesia's government will revoke rules requiring exporters of coal and palm oil to use domestic shipping companies for shipments, Coordinatin ...
Wednesday, 25 March 20
JAN-FEB 2020, INDONESIA SHIPPED 64.5 MLN TONNES OF COAL, UP +3.4% YOY - BANCHERO COSTA
In the 12 months of calendar 2019, Indonesia exported 386.4 mln tonnes of coal, according to vessel tracking data from Refinitiv. This represents a ...
Tuesday, 24 March 20
MARKET ANALYSIS - ALLIED
As countries around the world struggle to take back control of the ongoing COVID-19 pandemic the global economy shuts down bit by bit, leaving only ...
Tuesday, 24 March 20
THE TRIPLE SHOCK OF CORONAVIRUS IN SHIPPING: WILL IT LAST? - DREWRY
Transport capacity shortages, disruptions to supply chains and inability to plan since late January have been a dangerous combination. But will all ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Parliament of New Zealand
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Australian Coal Association
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Anglo American - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
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