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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, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
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- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- The University of Queensland
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- PTC India Limited - India
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
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