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