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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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Thursday, 25 November 21
SE ASIA POWER DEMAND TO RISE AS STATE SUPPORT MITIGATES COVID-19 IMPACT - FITCH RATINGS
Electricity demand in south-east Asia is likely to increase in 2021, following slow growth or contraction in 2020, thanks to state support that has ...
Thursday, 25 November 21
FITCH RATINGS INCREASES MOST GLOBAL METALS AND MINING PRICE ASSUMPTIONS - FITCH RATINGS
Fitch Ratings has increased most metals and mining price assumptions, particularly those that benefit from increased longer-term demand due to glob ...
Thursday, 25 November 21
CHINA'S COAL PRICE DROPS IN MID-NOVEMBER AMID GOVERNMENT’S SWEEPING MEASURES - GLOBAL TIMES
China’s coal prices have dropped significantly in mid-November compared with the beginning of the month, with the price of coking coal and co ...
Wednesday, 24 November 21
MARKET INSIGHT - INTERMODAL
Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chai ...
Wednesday, 24 November 21
WHY THIS MINING ANALYST IS UPBEAT ON THE IRON ORE PRICE FORECAST - MOTLEY FOOL
In many ways, 2021 can be called the year of the iron ore price. Much of the talk of the ASX town this year has revolved around this key economic m ...
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- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- The University of Queensland
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- VISA Power Limited - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Planning Commission, India
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