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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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Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
Friday, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
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- International Coal Ventures Pvt Ltd - India
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- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
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- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Posco Energy - South Korea
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
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