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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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Thursday, 11 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
Tuesday, 09 June 20
BUNKER SUPPLY CONTRACTS - KEY CONSIDERATIONS FOR THE BUYER - GARD
KNOWLEDGE TO ELEVATE
Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale ...
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- ICICI Bank Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- GMR Energy Limited - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
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