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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, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
Thursday, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
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- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- PTC India Limited - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- The University of Queensland
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
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