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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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- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- The University of Queensland
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Economic Council, Georgia
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- MS Steel International - UAE
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
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