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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, 29 July 20
2019 U.S. COAL PRODUCTION FALLS TO ITS LOWEST LEVEL SINCE 1978 - EIA
In 2019, U.S. coal production totaled 706 million short tons (MMst), a 7% decrease from the 756 MMst mined in 2018. Last year’s production wa ...
Wednesday, 29 July 20
MARKET INSIGHT - INTERMODAL
The dry bulk sector is beginning to recover from reduced SnP activity recorded in the first quarter of 2020. The table below illustrates that appro ...
Tuesday, 28 July 20
DEUTSCHE BANK TO END GLOBAL BUSINESS ACTIVITIES IN COAL MINING BY 2025 - REUTERS
Deutsche Bank, in a revamp of its policies for fossil fuels, said on Monday that it would end business activities worldwide related to coal mining ...
Monday, 27 July 20
IEEFA ENERGY FINANCE CONFERENCE 2020: COAL, LNG, PETROCHEMICAL SECTORS FACE POOR OUTLOOK AND UPHILL BATTLE FOR INVESTORS
Fossil fuel industries were becoming less financially attractive even before the global coronavirus pandemic
Three major fossil fuel ...
Friday, 24 July 20
IPA: THERMAL COAL IMPORTS AT MAJOR PORTS DECLINE 35 PC TO 17.71 MT IN APR TO JUNE - ECONOMIC TIMES
These ports had handled 27.13 MT of thermal coal and 14.95 MT of coking coal in the April-June period of the previous financial year
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- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- White Energy Company Limited
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Deloitte Consulting - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
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