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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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Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
Saturday, 18 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
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- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Australian Coal Association
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- White Energy Company Limited
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
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