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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, 20 September 19
INDIA TO INVITE BIDS FOR COMMERCIAL COAL MINING IN DECEMBER - MINISTER FOR COAL
India aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliament ...
Friday, 20 September 19
INDIA: ECONOMIC SLOWDOWN IMPACTS COAL IMPORT CARGO IN H1 FY20 - PTI
Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal gro ...
Wednesday, 18 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
During the first week of September, I had the privilege of attending the Donsö Shipping Meet 2019, in Donsö, a small island of around 1,& ...
Tuesday, 17 September 19
PANAMA SHIP REGISTRY MODERNIZES SHIP REGISTRATION
The Panama Ship Registry has announced it will integrate in a single platform “Electronic Ship Registration System (ESRS)” the present ...
Tuesday, 17 September 19
THE DRY BULK FREIGHT MARKET IS ALREADY ON A DOWNWARD CORRECTION - ALLIED
Here we are again, just a breath before the final quarter of the year. Under typical circumstances and on the basis of what we have seen during the ...
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- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
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