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