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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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Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
Thursday, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
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- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- VISA Power Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Australian Coal Association
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
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