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