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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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Sunday, 02 October 22
MISC STRENGTHENS ITS PARTNERSHIP WITH SEARIVER MARITIME
MISC Berhad (MISC) today announced that its subsidiaries Polaris LNG Three Pte. Ltd. and Polaris LNG Four Pte. Ltd. have secured long-term time cha ...
Thursday, 29 September 22
MARKET INSIGHT - INTERMODAL
This week, focus turns to the 38th APPEC Conference, where leading professionals from the global oil industry will discuss the future key drivers o ...
Thursday, 29 September 22
HIGH COAL PRICES REMAIN A CONCERN FOR DOMESTIC NON-FERROUS METAL COMPANIES - ICRA
According to ICRA on Monday, the high price of coal will have a negative effect on the profitability of domestic non-ferrous metal companies that m ...
Tuesday, 27 September 22
14% INCREASE IN EUROPEAN COAL DEMAND TO BE SHORT-TERM TREND - WOOD MACKENZIE
European seaborne thermal coal demand is projected to increase 14% or 12 million metric tonnes (Mt) this year to 98 Mt as it grapples with the curr ...
Friday, 23 September 22
CHINA DIGS DEEP TO RAISE COAL OUTPUT TO RECORD HIGH - REUTERS
China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassin ...
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- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Deloitte Consulting - India
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
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