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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, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Planning Commission, India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
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