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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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Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
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- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Deloitte Consulting - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
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