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