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