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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Thursday, 03 November 22
HANDYSIZE VALUES MOVING UP IN OCTOBER, WHILE LNG VALUES SKYROCKET - VESSELSVALUE
Handysize values have increased this month across most ages, following a period of decline. Values for generic 10 year old Handysizes have moved up ...
Thursday, 03 November 22
EUROPEAN GAS SUPPLY SURPLUS, NOVEMBER HBA DOWN TO US$ 308.2 PER TON - ESDM
European gas supply conditions have a major influence in determining fluctuations in the Reference Coal Price (HBA). The November 2022 HBA recorded ...
Wednesday, 02 November 22
MARKET INSIGHT - INTERMODAL
Only five weeks before western sanctions’ full effect, uncertainty over energy has markets and governments on the edge. What was initially th ...
Tuesday, 01 November 22
CHINA COAL TRADE DISRUPTED BY COVID OUTBREAKS AS WINTER LOOMS - REUTERS
China’s strict COVID-19 policy is constraining coal supplies and pushing up prices, industry officials and traders say, just weeks before the ...
Monday, 31 October 22
U.S. COAL-FIRED GENERATION DECLINING AFTER BRIEF RISE LAST YEAR - EIA
We expect 6% less U.S. coal-fired generation in 2022 than in 2021, according to our latest Short-Term Energy Outlook (STEO). Although coal-fired ge ...
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- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
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