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