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