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