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