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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, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
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- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- PTC India Limited - India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Australian Coal Association
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
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