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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, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
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- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Grasim Industreis Ltd - India
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
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