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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
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