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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, 04 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
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Wednesday, 04 December 19
INDONESIA REVIEWING RULES MANDATING COAL SALES TO LOCAL BUYERS: OFFICIAL - REUTERS
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Tuesday, 03 December 19
STABILITY AND COMPATIBILITY OF VERY LOW SULPHUR FUEL OILS - GARD
In order to meet increasing restrictions on the sulphur content in marine fuel as defined by MARPOL Annex VI Regulation 14.1.3, the characteristics ...
Monday, 02 December 19
COAL PRODUCTION IN INDIA UP BY 164.58 MT IN 5 YEARS - BUSINESS LINE
Raw coal production in the country has increased from 567.77 million tons (MT) in 2013-14 to 730.35 MT in 2018-19, Union Coal and Parliamentary Aff ...
Monday, 02 December 19
OPEC PREPS FOR OIL'S 2020 BALANCING ACT - WOOD MACKENZIE
What steps should OPEC and its non-OPEC partners take to keep the market in balance in 2020? Ahead of OPEC’s meeting in Vienna on 5 and 6 Dec ...
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- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Australian Coal Association
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
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