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