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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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Monday, 21 December 20
A REBOUND IN GLOBAL COAL DEMAND IN 2021 IS SET TO BE SHORT-LIVED, BUT NO IMMEDIATE DECLINE IN SIGHT - IEA
After a major drop in recent years, global coal demand is forecast to rise by 2.6% in 2021 before flattening out to 2025
A global ec ...
Friday, 18 December 20
AUSTRALIA PM WARNS OF ‘LOSE-LOSE’ IN ANY CHINA COAL SHIFT - REUTERS
Australian Prime Minister Scott Morrison said any shift by China away from importing high quality Australian coal would be a “lose-lose&rdquo ...
Friday, 18 December 20
BIG OIL AND COAL EXPORTERS FACE RECKONING AS PARIS AGREEMENT TURNS FIVE - CNA
On Dec 12, more than 70 global leaders came together at the UN’s Climate Ambition Summit, marking the fifth anniversary of the Paris Agreemen ...
Friday, 18 December 20
SOUTH AFRICAN COAL EXPORTERS LARGELY DEPENDENT ON THE ASIAN MARKETS - BANCHERO COSTA
South Africa is the fourth largest exporter of coal in the world, after Australia, Indonesia and Russia. In calendar 2019 the country exported a to ...
Thursday, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by Ch ...
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- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Australian Coal Association
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
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