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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 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
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- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
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