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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, 29 June 22
LNG MARKET REMAINS TIGHT - INTERMODAL
LNG market remains tight currently, mainly driven by the US LNG outage from the recent fire in Freeport LNG terminal together with the recent fall ...
Wednesday, 29 June 22
CHINA'S NEW PLAN FOR RENEWABLE ENERGY DEVELOPMENT FOCUSES ON CONSUMPTION - FITCH RATINGS
China’s focus on consumption penetration for renewable energy development in its recently released 14th five-year plan – 2021 to 2025 & ...
Wednesday, 29 June 22
APAC CORPORATE SECTOR OUTLOOKS SHIFT AMID GLOBAL SHOCKS - FITCH RATINGS’
Fitch Ratings’ mid-2022 corporate sector outlook review revealed that the Asia-Pacific (APAC) region saw the largest number of sector outlook ...
Thursday, 16 June 22
MARKET INSIGHT - INTERMODAL
Picking up from my last insight in March, on the early days of the invasion, it's worth pointing out the way that the fast-paced working enviro ...
Saturday, 11 June 22
AIMTEK INTERNATIONAL CONFERENCE AND AWARDS
Press Release: The prestigious AIMTEK International Conference and Awards concluded successfully on June 7th, 2022 at Radisson Blu, Yas Island Abu ...
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- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Planning Commission, India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
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