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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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Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
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- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Posco Energy - South Korea
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
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