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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, 11 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
On the 4th of September the Baltic Dry Index marked its highest level for 2019, reaching 2,518 points, while the rest of the dry indices also recor ...
Tuesday, 10 March 20
SHIPPING MARKET ANALYSIS
It might be already overstated, but it seems to be important to point out once again how peculiar the current circumstances are.
Before the st ...
Tuesday, 10 March 20
EIA FORECASTS U.S ELECTRIC POWER SECTOR DEMAND FOR COAL WILL FALL BY 81 MMST (15%) IN 2020
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019. According to EIA's Shor ...
Tuesday, 10 March 20
CORONAVIRUS: DEMAND DOWNGRADES FOR BULK COMMODITIES - WOOD MACKENZIE
The coronavirus outbreak is a rapidly evolving news story – and a real wildcard for bulks demand. Our global experts are monitoring the impac ...
Tuesday, 10 March 20
CHINA'S COAL-RICH PROVINCE ENSURES ENERGY SUPPLY AMID EPIDEMIC - XINHUA
China’s coal-rich province of Shanxi has seen more than 500 coal mines resume production in February, which ensured energy supply amid the ou ...
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- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Planning Commission, India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- VISA Power Limited - India
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
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