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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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Thursday, 26 May 22
MARKET INSIGHT - INTERMODAL
The newbuilding market activity has been significantly positive from a dry bulk owner perspective during the first half of 2022. Indeed, the contra ...
Wednesday, 18 May 22
INDONESIAN COAL PRICE REFERENCE DROPPED 4.42% IN MAY
COALspot.com: Indonesian Coal Price Reference for May delivery drops 4.42 per cent month on month.
The Indonesian Coal Price Referen ...
Thursday, 12 May 22
MARKET INSIGHT - INTERMODAL
Almost through half of the year, the overall shipping market continues to show signs of healthiness, after plenty of festivities and holidays that ...
Wednesday, 27 April 22
EUROPEAN UNION'S LNG IMPORTS - BANCHERO COSTA
In 2021, the European Union (27) was the third largest seaborne importer of LNG in the world, with a 15.8% share.
It followed Mainla ...
Tuesday, 26 April 22
CHINA'S APPETITE FOR BAUXITE HITS NEW RECORD AS Q1 IMPORTS JUMP 15.4% Y/Y - BIMCO
Bauxite shipments arriving in China hit new record levels in the first quarter of 2022 and grew at an average annual rate of 12.8% between 2017 and ...
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- PowerSource Philippines DevCo
- Interocean Group of Companies - India
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- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
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- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Thai Mozambique Logistica
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- Asmin Koalindo Tuhup - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- International Coal Ventures Pvt Ltd - India
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- Jaiprakash Power Ventures ltd
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- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Australian Coal Association
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