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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 06 July 22
MARKET INSIGHT - INTERMODAL
Following the 3rd Decarbonizing Shipping Forum, held in Hamburg on June 2022, there has been a meaningful resurgence of discussions within the ship ...
Tuesday, 05 July 22
WHY ARE VLSFO PRICES SO HIGH, ESPECIALLY IN SINGAPORE? - STEVE CHRISTY, INTEGR8 FUELS
Tightness in products still trumps talks of recession
Last month we wrote about the fears of recession versus the tightness in product markets ...
Tuesday, 05 July 22
ADANI ENTERPRISES LOWEST BIDDER IN COAL INDIA'S IMPORT TENDER: REPORT - BUSINESS STANDARD
Coal India Ltd floated its first import tender on behalf of power companies, where Adani Enterprises Ltd came out to be the lowest bidder, a report ...
Tuesday, 05 July 22
CHINA POLICY KEY FOR IRON ORE OUTLOOK - ING
China’s covid lockdowns and recessionary risks hit iron ore
Iron ore prices have fallen significantly from their year-to-date high of US$ ...
Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
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- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
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