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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, 05 March 20
INDONESIA'S BUKIT ASAM 2019 OUTPUT RISES 10.2% Y/Y - REUTERS
PT Bukit Asam, Indonesia’s state-owned coal miner, said on Wednesday its output in 2019 rose 10.2% to 29.1 million tonnes.
Coa ...
Thursday, 05 March 20
SEEING REMOTELY - IN SAFETY: BUREAU VERITAS PERFORMS FIRST SURVEY BY DRONE - BUREAU VERITAS
Bureau Veritas Marine & Offshore (BV), a world leader in testing, inspection and certification (TIC) services has completed its first survey by ...
Wednesday, 04 March 20
AN EPIDEMIC OF UNCERTAINTY - THE CORONAVIRUS AND FORCE MAJEURE - WFW
KNOWLEDGE TO ELEVATE
Do the effects of the coronavirus give rise to legitimate force majeure claims in connection with shipbuilding contracts ...
Wednesday, 04 March 20
CHINA IMPORTED 76.8 MLN TONNES OF CRUDE OIL FOR JANUARY & FEBRUARY 2020; UP 3.4% YOY - REFINITIV | BC
The COVID-19 crisis has been gripping China already for almost two months now. It’s having a huge negative impact on the economy, and this is ...
Wednesday, 04 March 20
MARKET INSIGHT - INTERMODAL
As it was expected, the whole world has been focusing on the spread of the Coronavirus, with the fast outbreak being primarily a massive humanitari ...
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- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
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