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