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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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Tuesday, 23 August 22
SHIPPING: GLOBAL TAX REFORM - WATSON FARLEY & WILLIAMS
OECD rules designed to implement a global minimum corporate tax rate for very large multinational groups have now been published and are expected t ...
Tuesday, 23 August 22
PARTIES CONCLUDE JOINT R&D AGREEMENT FOR WORLD’S FIRST AMMONIA FLOATING STORAGE AND REGASIFICATION BARGE CONTRIBUTING TO PROMOTING THE EARLY INTRODUCTION OF AMMONIA FUEL - NYK
NYK Line, Nihon Shipyard Co., Ltd. (NSY), ClassNK, and IHI Corporation (IHI) signed a joint research and development agreement for the commercializ ...
Monday, 22 August 22
INDONESIAN GOVERNMENT IMPOSED ON NEW PROGRESSIVE ROYALTIES FOR COAL
Indonesian President Joko Widodo has signed a Government Regulation (Number 26 of 2022) on 15 August 2022 related to the progressive royalty rates ...
Monday, 22 August 22
CHINA'S JULY RUSSIAN COAL IMPORTS HIT 5-YR HIGH AS WEST SHUNS MOSCOW - REUTERS
China’s coal imports from Russia jumped 14% in July from a year earlier to their highest in at least five years, as China bought discounted c ...
Sunday, 21 August 22
COAL-RICH POLAND FACES WINTER OF ENERGY DISCONTENT - DW
Poland uses 10 million tons of coal a year to heat households — a whopping 87% of all coal consumed in EU homes in 2019, according to the War ...
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- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- PTC India Limited - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
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