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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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Tuesday, 29 December 20
CHINA COKING COAL FUTURES RISE FOR THIRD DAY ON SUPPLY WORRIES - REUTERS
Chinese coking coal futures extended gains into a third session on Monday, jumping as much as 6.2% as lower imports, sliding inventories and mines ...
Wednesday, 23 December 20
COKING COAL'S DECLINE LIKELY TO FOLLOW THE PATH OF THERMAL COAL’S PROGRESSIVE DEMISE - IEEFA
Technology disruption the likely theme of global energy markets in 2021
There has been a growing tsunami of climate commitment annou ...
Wednesday, 23 December 20
MARKET INSIGHT - INTERMODAL
As we all know, China forges more steel than the rest of the world combined, and even during this unprecedented pandemic, the nation is set to brea ...
Tuesday, 22 December 20
2021 DRY BULK OUTLOOK - SUPPLY GROWTH - TORVALD KLAVENESS
In the first article in the series we mentioned that dry bulk freight was in a super cycle between 2001 and 2008. The growth in global yard capacit ...
Tuesday, 22 December 20
INDIA'S COAL DEMAND IS SET TO EXPAND DESPITE PLUMMETING IN 2020 - IEA
Coal consumption in India amounted to 979 Mt in 2019, with the largest share being thermal coal (including lignite) for electricity generation (687 ...
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- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
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