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