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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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Tuesday, 25 May 21
KOREA SOUTHERN POWER INVITED BIDS FOR 870,000 MT OF MIN 5300 NCV COAL FOR 2021 TO 2023.
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 870,000 MT of Min 5,300 kcal/kg NCV coal for Augu ...
Tuesday, 25 May 21
CHINA’S COAL OUTPUT RISES IN FIRST FOUR MONTHS - XINHUA
China’s raw coal output rose 11.1 percent year on year to 1.29 billion tonnes in the first four months of 2021, official data showed.
&nb ...
Tuesday, 25 May 21
MARINE SHIPPERS BULK UP: ANOTHER GAME OF CHICKEN IN THE WORKS? - THE KOREA TIMES
Global shipping companies have been placing orders for large ships, with many anticipating further increased competition within the next three year ...
Friday, 21 May 21
MARKET INSIGHT - INTERMODAL
The dry bulk market’s counter seasonal surge so far into the first half of the year -in a sort of 2010 manner - and Capesize’s recent r ...
Wednesday, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
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- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- The Treasury - Australian Government
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