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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, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
Thursday, 06 October 22
COAL INDIA ASKED TO ENHANCE SUPPLY TO THERMAL POWER PLANTS - IANS
With the festival season round the corner, Coal India Ltd. has been directed by the government to scale up dispatch to thermal power plants.
&n ...
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- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- The University of Queensland
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
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