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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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Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
Wednesday, 22 March 23
MARKET INSIGHT - INTERMODAL
The crude tanker market continues to gather momentum as we head towards the end of 1Q2023, against a backdrop of strong U.S. exports paired with a ...
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- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- London Commodity Brokers - England
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
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