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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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Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
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- Posco Energy - South Korea
- The Treasury - Australian Government
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- The University of Queensland
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Planning Commission, India
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- MS Steel International - UAE
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
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