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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, 01 December 21
MARKET INSIGHT - INTERMODAL
Essentially, anyone involved in the shipping and commodity markets still struggle with commodity supply issues and skyrocketing prices in the conte ...
Tuesday, 30 November 21
CHINA'S TOP ECONOMIC PLANNER SUMMONS COAL PRODUCERS; LONG-TERM PRICING MECHANISM IS ADVISED - GLOBAL TIMES
China’s top economic planner the National Development and Reform Commission (NDRC) said on Monday that they summoned coal producers for a hea ...
Tuesday, 30 November 21
CHINA'S COAL PRICES PLUNGE AFTER GOVT SIGNALS MORE PRICE REGULATION - REUTERS
China’s thermal coal futures dropped 5.6% on Monday after the state economic planner signaled further regulations for prices of the dirty pow ...
Friday, 26 November 21
AS COAL MARKET STABILIZES, CHINA STEPS UP NATURAL GAS SUPPLY TO MEET WINTER DEMAND - GLOBAL TIMES
The daily supply of natural gas in China has exceeded 1 billion cubic meters (bcm) since November began, up 11 percent year-on-year, data from stat ...
Friday, 26 November 21
CHINA FINDS COMPLIANCE PROBLEMS IN COAL PRICE INDEX PROBE - REUTERS
China’s state planner on Wednesday said it had discovered some “noncompliant” behaviour among coal price index providers as it an ...
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- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- London Commodity Brokers - England
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Planning Commission, India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
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