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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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- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
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