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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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Friday, 29 July 22
GLOBAL COAL DEMAND IS SET TO RETURN TO ITS ALL-TIME HIGH IN 2022 - IEA
The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according ...
Thursday, 28 July 22
CREW FAMILIARISATION IS CRITICAL WHEN TAKING OVER A VESSEL - WEST P&I CLUB
Knowledge to Elevate
When a vessel changes ownership and/or manager, it can take some considerable time before the new crew and mana ...
Thursday, 28 July 22
RETURN OF COAL A THREAT TO EUROPEAN COMPANIES' ESG RATINGS - REUTERS
European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them ...
Wednesday, 27 July 22
MARKET INSIGHT - INTERMODAL
Amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal import ...
Tuesday, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
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- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
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