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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, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
Friday, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
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- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
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