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