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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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Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
Tuesday, 13 November 18
INDIA: POWER DEMAND UP; COAL STOCKS AT MINES AT A 5-YEAR LOW - FINANCIAL EXPRESS
Stocks at Coal India mines plunged to a five-year low of 21 million tonne (mt) in October, as a sudden surge in demand for the fuel from the power ...
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- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
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