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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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Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
Saturday, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
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- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- The Treasury - Australian Government
- PTC India Limited - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
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