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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, 19 August 20
MISC MARKS ITS MAIDEN FORAY INTO MAJOR DEEP-WATER PROJECT IN LATIN AMERICA WITH MERO 3 FPSO
MISC Berhad (MISC) is pleased to announce its acceptance of Letter of Intent (LOI) from Petróleo Brasileiro S.A. (Petrobras) for the provisi ...
Wednesday, 19 August 20
MARKET INSIGHT - GEORGE LAIOS | INTERMODAL
Since the Covid-19 outbreak, governments and central banks around the globe have been using their ammunition and stimulus packages to keep their ec ...
Wednesday, 19 August 20
INDIA SAW A SHARP DECLINE IN ENERGY COAL IMPORTS IN JANUARY - JUNE 2020; –27 PER CENT YOY - BHP
Energy coal prices were weak in the second half of financial year 2020, BHP says in its Economic and Commodity Outlook FY20.
Accordi ...
Wednesday, 19 August 20
COAL PRICES TO REMAIN SUBDUED THIS FISCAL AMID WEAK DEMAND, HIGH INVENTORY - THE HINDU BUSINESS LINE
Coal offtake is improving gradually as lockdown eases
Coal prices are expected to remain subdued to weak demand and high inventory l ...
Tuesday, 18 August 20
BLACKBALLED: WILL COAL BOUNCE BACK FROM SLUMP OR IS IT TERMINAL? - SYDNEY MORNING HERALD
Even by the standards of this miserable year, 2020 has been a shocker for the global coal industry.
As the lockdown kicked in demand ...
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- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
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