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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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Monday, 14 June 21
'WISHFUL THINKING': WHY CHINA NEEDS AUSTRALIAN IRON ORE FOR 'MANY YEARS' TO COME - YAHOO FINANCE AU
A “wintry period”.
That’s what’s expected to happen to Australia’s economy “when” China st ...
Sunday, 13 June 21
COAL AND LNG’S SURGE IN ASIA PLAYS INTO RENEWABLE ENERGY HANDS - REUTERS
Liquefied natural gas (LNG) and thermal coal prices in Asia have been roaring ahead in recent months amid strong demand, but while welcome news for ...
Friday, 11 June 21
5 REASONS GLOBAL SHIPPING COSTS WILL CONTINUE TO RISE - ING
No short-term relief
Shipping costs have been growing strongly since the autumn of 2020, but the first months of this year have seen a new surg ...
Friday, 11 June 21
ASIA COAL PRICES SURGE, BUT CHINA-AUSTRALIA DISPUTE MEANS RALLY IS UNEVEN - REUTERS
Thermal coal prices across Asia have surged to multi-year highs amid strong demand and some supply constraints, but some types of the fuel have don ...
Thursday, 10 June 21
INDONESIA COAL EARNINGS RECOVERY TO SLOW AFTER STRONG 1Q - FITCH RATINGS
Fitch Ratings expects the recovery in operating and financial performance of Indonesian coal miners and coal contractors to slow during rest of 202 ...
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- Aditya Birla Group - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
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