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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, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
Friday, 04 February 22
RENEWABLES ON THE RISE, COAL CONTINUOUSLY FALLING - EUROPEAN COMMISSION
Although oil (34.5%) and natural gas (23.7%) were still the most important fuel sources in the EU energy mix in 2020, renewable energy’s shar ...
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- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Economic Council, Georgia
- White Energy Company Limited
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Australian Coal Association
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- The University of Queensland
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
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