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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, 14 December 18
KOSPO INVITES BIDS FOR 1,177,000 METRIC TONS OF COAL FOR Q1' 19 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 701,000 MT of min 5,600 kcal/kg NCV coal and ...
Friday, 14 December 18
COAL IMPORT TO BE CHECKED BY RISING DOMESTIC PRODUCTION - FINANCIAL EXPRESS
The government’s effort to increase domestic coal production and power demand falling with the onset of the winters will check coal imports, ...
Thursday, 13 December 18
STRAITS AFFECTED BY TERRITORIAL DISPUTE BETWEEN SINGAPORE AND MALAYSIA - THE STANDARD CLUB
A recent territorial dispute has occurred between Singapore and Malaysia involving the Straits of Johor.
The Malaysian Attorney Gene ...
Wednesday, 12 December 18
SHIPPING MARKET INSIGHT - CHRISTOPHER WHITTY
China’s monthly iron ore imports dropped for the first time this year joined by declines in copper and soybeans as economic growth slows in t ...
Tuesday, 11 December 18
SHIPPING MARKET ANALYSIS - ALLIED
A lot of discussions have been made as to the effects of the IMO 2020 regulation on OPEX levels, investment feasibility of& ...
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- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Bhatia International Limited - India
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
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