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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, 19 February 20
AS OCEAN TEMPERATURES RISE, SHIPOWNERS LOOK FOR WAYS TO COPE - WARTSILA
The world is heating up, and its oceans are no exception. According to the International Panel on Climate Change (IPCC), the oceans absorb the majo ...
Wednesday, 19 February 20
MARKET INSIGHT - INTERMODAL
The coronavirus outbreak is estimated to negatively affect global economy by at least EUR400bn this year, representing around the 0.4% of global GD ...
Tuesday, 18 February 20
WEEKLY MARKET ANALYSIS - ALLIED
Under such poorly performing market circumstances, many usually take the historical approach, in order to better understand and further analyze the ...
Tuesday, 18 February 20
ADARO SHIPPED 27 PERCENT OF ITS TOTAL COAL PRODUCTION IN 2019 TO INDIA AND CHINA
PT Adaro Energy Tbk (AE) produced 58.03 Mt of coal from PT Adaro Indonesia (AI), Balangan Coal Companies and Adaro Me ...
Tuesday, 18 February 20
ADARO REMAINS POSITIVE ON THE LONG-TERM FUNDAMENTALS OF COAL MARKET SUPPORTED BY THE SOUTHEAST ASIA AND SOUTH ASIA REGION
The global seaborne thermal coal market in 2019 was faced with macro and industry challenges which pushed international coa ...
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- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Minerals Council of Australia
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
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