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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, 12 August 20
U.S. COAL PRODUCTION IN 2020 WILL DECREASE BY 29% FROM 2019 LEVELS TO 502 MMST - EIA
U.S. coal consumption, which dropped to its lowest point since April, totaled 95 MMst in the second quarter of 2020.
EIA expec ...
Tuesday, 11 August 20
BHP COAL ASSETS WORTH A BILLION LESS THAN JUST TWO YEARS AGO - IEEFA
Another global investor, the UK’s biggest public pension fund NEST, has withdrawn funds from BHP this week because the company is profiting & ...
Monday, 10 August 20
COAL IMPORT DROPS 43% IN JULY OWING TO HIGH STOCKPILE AT PITHEADS, PLANTS - PTI
“The market participants seem to have adopted a wait and watch approach and are currently looking for a direction. We do not expect to see an ...
Saturday, 08 August 20
GLOBAL COAL POWER PUZZLE - BALTIC EXCHANGE
Global Energy Monitor’s latest Global Coal Plant Tracker has put another nail in the coffin for the coal-carrying fleet with its finding that ...
Friday, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
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- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- White Energy Company Limited
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Australian Coal Association
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
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