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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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Wednesday, 14 October 20
MARKET INSIGHT - INTERMODAL
The tanker market has experienced severe freight rate and asset value declines over the past 5 months. A potential market upturn may arise in the c ...
Friday, 09 October 20
INDIA'S COAL IMPORTS IMPROVE SOMEWHAT, BUT RECOVERY IS UNEVEN - REUTERS
India’s coal imports, depressed by the impact of coronavirus this year, regained ground in September, but in an uneven uptick – shipmen ...
Thursday, 08 October 20
CHINA'S COAL IMPORTS FROM INDONESIA DECLINED 16.4% Y-O-Y, TO 80.2 MLN TONNES IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
China's coal imports boomed in 2019, surprising many who had expected the government would clamp down strictly on shipments.
...
Thursday, 08 October 20
GLIMMER OF LIGHT FOR COAL, BUT SHORT TERM - FNARENA
Is coal on the rebound? Demand appears stronger and supply reductions have underpinned a tightening market. Certainly, the Newcastle thermal coal p ...
Wednesday, 07 October 20
U.S. COAL PRODUCTION TO DECREASE BY 26 PERCENT IN 2020 COMPARED TO 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 525 million short tons (MMst), compared with 705 MMst in 2019, a 26% decrease.
COVID-19 a ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- India Bulls Power Limited - India
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- White Energy Company Limited
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Australian Coal Association
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
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