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