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