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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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Saturday, 06 August 22
SUMITOMO Q1 PROFIT RISES 45% ON STRONGER PRICES OF COAL, NICKEL - REUTERS
Japanese trading house Sumitomo Corp 8053.T said on Wednesday its net profit for the April-June quarter rose 45% to a record thanks to higher price ...
Saturday, 06 August 22
GERMANY'S ENERGY U-TURN: COAL INSTEAD OF GAS - DEUTSCHE WELLE
Berlin has realized it will never again import as much energy from Russia as before the Ukraine war. So the challenge is to wean Germany off its de ...
Saturday, 30 July 22
NUANCES OF FORCE MAJEURE CLAUSE - BALTIC EXCHANGE
Knowledge to Elevate
In NKD Maritime Limited v. Bart Maritime (No 2) Inc (Shagang Giant) [2022] EWHC 1615 (Comm), Bart Maritime (No 2) Inc (th ...
Saturday, 30 July 22
AEMO URGES QUICKER SHIFT TO RENEWABLES AMID COAL FAILURES AND SOARING FOSSIL FUEL COSTS
The Australian Energy Market Operator has called for an accelerated shift to wind and solar, backed up by batteries and other storage, as a devasta ...
Friday, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
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- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Minerals Council of Australia
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- CNBM International Corporation - China
- The University of Queensland
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- White Energy Company Limited
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
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