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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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Thursday, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
Tuesday, 13 December 22
AUSTRALIA TO CAP PRICES OF COAL, GAS TO DRIVE DOWN ENERGY BILLS - REUTERS
Australia will cap coal and gas prices for a year in a bid to shave utility bills for households and businesses hit by soaring costs because of the ...
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- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Central Electricity Authority - India
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Trasteel International SA, Italy
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