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