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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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- Economic Council, Georgia
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
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- The University of Queensland
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- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
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- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
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- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
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- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Parliament of New Zealand
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
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