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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, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- The University of Queensland
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- McConnell Dowell - Australia
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
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