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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 14 April 21
MARKET INSIGHT - INTERMODAL
After a series of months where the dry bulk sector was attracting most of the buying interest, tankers SnP activity spiked in the previous weeks. O ...
Tuesday, 13 April 21
INDONESIAN COAL PRICE REFERENCE IN APRIL UP AGAIN ON FIRM DEMAND
COALspot.com: The Indonesia coal price reference for April 2021 settles at US$ 86.68 per ton FOB vessel.
The Indonesia coal pr ...
Monday, 12 April 21
CHINA'S ECONOMIC RECOVERY PUSHES COAL MINES TO INCREASE YIELD - GLOBAL TIMES
China’s fast economic rebound from coronavirus has driven up electricity demand, leading to higher consumption of coal which is seeing rising ...
Monday, 12 April 21
GLOBAL COAL PRODUCTION EXPECTED TO RISE BY 3.5% IN 2021, SAYS GLOBALDATA
Global coal output is estimated to have declined by 2% in 2020 due to COVID-19-related lockdowns and restrictions, with significant reductions obse ...
Wednesday, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
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- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
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- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
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- Goldman Sachs - Singapore
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- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
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- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
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- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
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- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
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- Posco Energy - South Korea
- Ministry of Mines - Canada
- White Energy Company Limited
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- ICICI Bank Limited - India
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- Globalindo Alam Lestari - Indonesia
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- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
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- International Coal Ventures Pvt Ltd - India
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- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
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- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
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- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
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- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
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- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Australian Coal Association
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