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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, 22 December 19
TRADING PLACES FOR 2020 - BALTIC EXCHANGE
In the sea of 2020 predictions, Saxo Bank’s Outrageous Predictions sail their own very unique course. For nearly 20 years the Danish investme ...
Saturday, 21 December 19
SUPRAMAX: A 63,000 DWT VESSEL, OPEN CIGADING, FIXED A TRIP VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $8,500 - BALTIC BRIEFING
Capesize
The Capesize market this past week has been attempting to recalibrate itself in consideration of weakening freight levels and increasi ...
Saturday, 21 December 19
SHIPPING'S SUPPLY AND DEMAND TRENDING OFF BALANCE - BIMCO
One of the most worrying trends that has developed recently – which will affect shipping demand in the years to come – is the falling t ...
Friday, 20 December 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 19 December 19
COAL POWER GENERATION CONTINUES TO DECLINE IN GERMANY: DESTATIS, XINHUA REPORTED
The volume of electricity generated in coal-fired power plants in Germany decreased “markedly” by 37 percent to 34 billion kilowatt-hou ...
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- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- PTC India Limited - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Planning Commission, India
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
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