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