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