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