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