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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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Monday, 19 September 22
BUMA AUSTRALIA AWARDED A$400 MILLION CONTRACT EXTENSION BY BMA FOR GOONYELLA PROJECT
Press Release – PT Delta Dunia Makmur Tbk. (the "Company") announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA ...
Saturday, 17 September 22
CHINA WARNS COAL COMPANIES AGAINST DUAL CONTRACTS, KEEP PRICES STABLE - REUTERS
China’s state economic planner warned coal companies operating at ports in the Bohai Bay region to comply with their long-term contracts to k ...
Saturday, 17 September 22
IS A GLOBAL RECESSION IMMINENT? - WORLD BANK
Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has i ...
Saturday, 17 September 22
FITCH RATINGS REVISES GLOBAL METALS & MINING PRICE ASSUMPTIONS
Fitch Ratings has revised its metals and mining price assumptions reflecting evolving economic growth expectations and demand and supply dynamics.
...
Friday, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
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- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
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