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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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Wednesday, 06 March 19
SHIPPING MARKET INSIGHT - INERMODAL
In a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially w ...
Saturday, 02 March 19
A 60,500-TONNER WAS BOOKED DELIVERY SINGAPORE, VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $11,250 - BALTIC BRIEFING
Capesize
Vale’s ongoing absence from the Brazil spot market continued to have a negative impact on sentiment, with rates falling in all a ...
Thursday, 28 February 19
COAL'S PERFECT STORM HITS $70 BILLION AUSTRALIAN PROJECTS - BLOOMBERG
It’s been a tough few weeks for our coal industry.
First there was a court ruling blocking a new mine on climate change ground ...
Wednesday, 27 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
With the IMO 2020 approaching, it becomes challenging for the market to accurately explore the run-up to the deadline given that marine fuel-oil of ...
Tuesday, 26 February 19
CHINA RESTRICTS SEABORNE COAL IMPORTS - WOOD MACKENZIE
In response to news on China's Dalian port restricting seaborne coal imports, Wood Mackenzie's experts provide the following commentary.
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- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
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