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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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Wednesday, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
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- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- White Energy Company Limited
- Central Electricity Authority - India
- Australian Coal Association
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Deloitte Consulting - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
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