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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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Wednesday, 30 November 22
INDONESIA’S BUMI RESOURCES TARGETS 2023 COAL OUTPUT OF 80 MLN TONNES - REUTERS
Indonesian coal miner PT Bumi Resources Tbk BUMI.JKis eyeing a 10% increase in output to 80 million tonnes next year amid expectations for more fav ...
Wednesday, 30 November 22
TANKERS: LONGER HAULS TO SUPPORT CONTINUED STRENGTH - BIMCO
Highlights
A rebound in the dirty tanker trade has led the Baltic Exchange Dirty Index (BDTI) to increase by 64% since our last report from mid ...
Wednesday, 30 November 22
MARKET INSIGHT - INTERMODAL
Shipping, although a conservative and innovation adverse industry, is currently in a transition period of digital transformation. According to a su ...
Tuesday, 29 November 22
INDIA TO RECEIVE FIRST LNG CARGO FROM INDONESIA’S TANGGUH LNG - REUTERS
India will receive its first cargo from Indonesia’s Tangguh liquefied natural gas (LNG) plant at the Dahej terminal on Monday, according to a ...
Tuesday, 29 November 22
SEABORNE COAL FLOWS IN 2022 - SIGNAL
This year is crucial for the energy mix in European countries, as the EU has imposed new sanctions on Russia. It is important to emphasize that the ...
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- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- PTC India Limited - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- The University of Queensland
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
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