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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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Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- VISA Power Limited - India
- Edison Trading Spa - Italy
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- White Energy Company Limited
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- PTC India Limited - India
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
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