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