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