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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 September 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.73 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.91 points Monday, up 0.73 percent week on week.
The index, released by China ...
Tuesday, 29 September 20
SHIPPING MARKET - ALLIED
Here we are, just a short breath before the final quarter of the year, and many are now debating to what extent we can really expect a firm dry bul ...
Tuesday, 29 September 20
INDONESIAN COAL COMPANIES' EARNINGS TO WEAKEN IN 2H20 - FITCH RATINGS
Rated Indonesian coal miners and contractors will have weaker operating and financial performances in the second half of 2020 than in the first, sa ...
Tuesday, 29 September 20
RUSSIA'S COAL PRODUCTION TO DROP BY 10.5% IN 2020, SAYS MINISTRY - TASS
Russia’s Economic Development Ministry projects a 10.5% decrease in coal production in the country in 2020 compared with last year to 395 mln ...
Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
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- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
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