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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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Sunday, 11 July 21
ROBUST CHINA COAL DEMAND AMID AUSTRALIA IMPORT BAN FUELS PRICE RALLY - REUTERS
Seaborne coal has become a quiet winner among energy commodities, lacking the attention of higher-profile crude oil and liquefied natural gas (LNG) ...
Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline ...
Friday, 09 July 21
EIA FORECASTS COAL’S GENERATION SHARE IN U.S TO RISE FROM 20% IN 2020 TO 24% THIS YEAR BUT TO FALL TO 22% NEXT YEAR
The July Short-Term Energy Outlook (STEO) of EIA remains subject to heightened levels of uncertainty related to the ongoing economic recovery from ...
Friday, 09 July 21
KOREA SOUTH-EAST POWER CO., LTD. INVITES BIDS FOR 1.86 MILLION TONS OF COAL OF 5600 & 4000 NCV COAL FOR THREE YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 280,000 – 300,000 MT of Min. ...
Friday, 09 July 21
CAN WE EXPECT AFFORDABLE POWER SUPPLY BY REPLACING COAL BASED POWER WITH LNG? - FINANCIAL EXPRESS
Bangladesh government’s recent decision to cancel the contracts for 10 coal fired power plants in late June 2021 has invited interest in the ...
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- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
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