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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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Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due ...
Thursday, 21 January 21
CHINA'S SPOT THERMAL COAL PRICES REFRESH RECORD HIGH - MYSTEEL
Despite the moderate rebound in temperatures across most regions of China after late December’s deep-freeze, thermal coal prices in the count ...
Wednesday, 20 January 21
CORONAVIRUS OUTBREAK IN HEBEI HAS LIMITED IMPACT ON CHINA'S STEEL INDUSTRY - FITCH RATINGS
The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China’s steel industry, Fitch Ratings says.
...
Wednesday, 20 January 21
MARKET INSIGHT - INTERMODAL
While 2020 is finally behind us, its negative impacts are still hovering over the shipping market. That being said, it is still too early to even s ...
Saturday, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
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- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Australian Coal Association
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- GMR Energy Limited - India
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- The University of Queensland
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
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