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