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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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Thursday, 10 October 19
THERMAL COAL IMPORT LIKELY TO CROSS 200 MT IN 2019-20 - TIME OF INDIA
The country's overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current financial year, according to Icra. ...
Wednesday, 09 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we have already stated in previous insights, we had expected that the recovery on rates and activity across all segments in the offshore market ...
Thursday, 03 October 19
OIL PRICE ASSUMPTIONS UNCHANGED, NBP GAS PRICE LOWERED - FITCH RATINGS PRIMARY - FITCH RATINGS
Our oil price assumptions are unchanged, despite the recent price volatility following the attacks on Saudi Arabia's oil infrastructure, Fitch ...
Thursday, 03 October 19
SHIPPING MARKET INSIGHT
Edible oil products across the board are showing healthy amount of export activity, however, rates in most cases are struggling to move accordingly ...
Friday, 27 September 19
LOWDOWN ON INCOTERMS 2020 OVERHAUL - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
This ninth revision of Incoterms is changed in style and substance. The revisions improve certain aspects of Incoterms 20 ...
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- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- The University of Queensland
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- PTC India Limited - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Economic Council, Georgia
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
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