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