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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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Thursday, 26 August 21
INDIA IMPORTED 17.06 MLN TONNES OF LPG IN 2020; UP 11.5% Y-O-Y
Global LPG trade remained fairly positive in 2020, despite the global economic impact from COVID-19, and surged strongly in the first half of 2021. ...
Thursday, 26 August 21
MARKET INSIGHT - INTERMODAL
24th of August 2021, the Baltic Dry Index reached 4,201, a YTD high and the highest since May 2010.
Cape 5TC daily average @ 51,472
...
Tuesday, 24 August 21
COAL PRICE RALLY TO PRESSURE CHINESE POWER GENCOS’ MARGINS FITCH RATINGS
Fitch Ratings expects the pressure on Chinese power generation companies’ (gencos) profit from the recent coal price surge to weaken their cr ...
Tuesday, 24 August 21
TIGHT POWER SUPPLY IN CHINA AMID STRONG DEMAND, HIGH COAL PRICES - FITCH RATINGS
China experienced tight power supply in 1H21 on stronger than expected power demand as economic activity continued to recover, Fitch Ratings says i ...
Monday, 23 August 21
CHINESE COAL PRODUCTION RISES 4.9 PCT IN 1ST 7 MONTHS OF 2021 - NBS
Official figures demonstrated that the Chinese raw coal production surged 4.9 percent annually to 2.26 billion tonnes in the January-July period of ...
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- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- The University of Queensland
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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