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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, 18 September 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, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
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- Ministry of Mines - Canada
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
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- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
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