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