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