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