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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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Tuesday, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
Saturday, 23 July 22
STABILITY OF RUSSIAN GAS FLOWS REMAIN UNCERTAIN, DESPITE THE REOPENING OF NORD STREAM - WOOD MACKENZIE
Gazprom confirmed today that regular annual maintenance of Nord Stream is officially over and gas flows restarted at 63 million cubic metres per da ...
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- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Central Electricity Authority - India
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Planning Commission, India
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
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