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