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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, 19 July 22
WHY SHIPPING MIGHT BE ABOUT TO GET A LITTLE BIT SLOWER - WORLD ECONOMIC FORUM
If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long ...
Tuesday, 19 July 22
GERMANY'S INCREASED COAL, OIL USE WILL BE TEMPORARY, SCHOLZ SAYS - CNBC
Chancellor Olaf Scholz says Germany’s decision to reactivate coal and oil-fired power plants to relieve energy shortages because of the war i ...
Tuesday, 19 July 22
INDONESIA REMOVES PALM OIL EXPORT LEVY UNTIL AUG. 31 - REUTERS
Indonesia has scrapped its export levy for all palm oil products until Aug. 31 in a fresh attempt to boost exports and ease high inventories, finan ...
Tuesday, 19 July 22
CHINA'S JUNE DAILY COAL OUTPUT JUMPS ON PEAK SUMMER DEMAND - REUTERS
China’s daily coal output in June rose 6.6 per cent from a month earlier as miners cranked up output ahead of peak summer temperatures, when ...
Tuesday, 19 July 22
SEEING RED? - WOOD MACKENZIE
What a Republican mid-term victory could mean for US energy and climate policy
According to current polling the Republican Party has ...
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- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
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