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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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Wednesday, 17 August 22
PAXOCEAN, HONG LAM MARINE AND BUREAU VERITAS SIGN MOU TO DEVELOP AMMONIA BUNKER VESSEL DESIGN - BUREAU VERITAS
PaxOcean Engineering Pte. Ltd. has signed a Memorandum of Understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and class ...
Wednesday, 17 August 22
GOODFUELSS ASIA-PACIFIC BRANCH KICKSTARTS SUSTAINABLE BIOFUEL DELIVERIES WITH NYK AS FIRST CLIENT - GOOD FUELS
GoodFuels, the leading biofuels pioneer for the global transport industry, has today announced that it has successfully supplied sustainable marine ...
Tuesday, 16 August 22
EU BAN ON RUSSIAN COAL IMPORTS COMES INTO FORCE - DEUTSCHE WELLE
The European Union banned Russian coal imports in response to the invasion of Ukraine as part of sanctions in April. Since then, it’s been sc ...
Thursday, 11 August 22
MARKET INSIGHT - INTERMODAL
On July 22nd, Ukraine signed a deal with Russia to release 22mn tons of grain from Ukraine’s 3 major ports (Yuzhny, Chornomorsk, Odesa). Such ...
Wednesday, 10 August 22
THE FUTURE OF COAL: EIGHT KEY THEMES FROM THE GLOBAL COAL FORUM - WOOD MACKENZIE
Coal investors face a multi-layered and unavoidable challenge: markets distorted by war, trade constraints and the existential threat of the energy ...
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- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Australian Coal Association
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Parliament of New Zealand
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Planning Commission, India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Wilmar Investment Holdings
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
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