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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, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
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- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
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