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