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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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Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
Wednesday, 14 April 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 1.10 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.05 points Monday, down 1.10 percent week on week.
The index, released by Chi ...
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- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
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