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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, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
Thursday, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
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- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
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