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