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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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Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
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- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- The University of Queensland
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
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