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