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