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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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Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
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- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
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