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