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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, 15 July 21
U.S. FOSSIL FUEL CONSUMPTION FELL BY 9% IN 2020, THE LOWEST LEVEL IN NEARLY 30 YEARS - EIA
U.S. fossil fuel consumption fell by 9% in 2020, the lowest level in nearly 30 years
In 2020, total consumption of fossil fuels in t ...
Thursday, 15 July 21
IN 2020, U.S. COAL PRODUCTION FELL TO ITS LOWEST LEVEL SINCE 1965 - EIA
U.S. coal production totaled 535 million short tons (MMst) in 2020, a 24% decrease from the 706 MMst mined in 2019 and the lowest level of coal pro ...
Wednesday, 14 July 21
MARKET INSIGHT - INTERMODAL
In its latest Global Economic Prospects report, the world bank recorded the strongest post-recession global growth in 80 years, but emerging and de ...
Tuesday, 13 July 21
JAPAN STILL SEEKING TO EXPLOIT COAL POWER LOOPHOLES - IEEFA
JBIC wants to continue burdening developing nations with its expensive coal-fired power technology
Japan is continuing to push its expensive c ...
Sunday, 11 July 21
COAL SHOWS ITS STAYING POWER AS ECONOMIES BOUNCE BACK - THE WALL STREET JOURNAL
Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Parliament of New Zealand
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
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