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