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