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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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Friday, 20 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 19 November 20
MARKET INSIGHT - INTERMODAL
As we are moving towards the end of the year, the overall deal landscape of the dry bulk sector corresponding to the second half of 2020 (up to dat ...
Tuesday, 17 November 20
COAL SQUEEZE INTENSIFIES - BALTIC EXCHANGE
The message from the top is clear: cut out coal. While the regulatory pressure has been evident for some time, the race to banish the black stuff s ...
Tuesday, 17 November 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 128.72 points Monday, up 0.35 percent week on week.
The index, released by China ...
Tuesday, 17 November 20
AUSTRALIAN COAL EXPORTS TO CHINA SLUMP, BUT PRICES ARE MIXED - REUTERS
China’s unofficial ban on coal imports from Australia is starting to take its toll on volumes, with departing cargoes down sharply so far in ...
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- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Petron Corporation, Philippines
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- MS Steel International - UAE
- Star Paper Mills Limited - India
- The University of Queensland
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
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