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