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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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Friday, 14 July 23
CLEAN COAL USE KEY TO DEEP CUTS IN EMISSIONS, STABLE ELECTRICITY SUPPLY - CHINA DAILY
China must push for the clean use of coal and step up integration of the dirty fuel with carbon capture, utilization and storage to achieve sustain ...
Thursday, 13 July 23
VIETNAM'S COAL EMISSIONS PRIMED FOR SURGE AFTER IMPORTS JUMP - REUTERS
Vietnam’s thermal power emissions are primed for a steep climb this summer after the country’s imports of thermal coal soared to their ...
Monday, 26 June 23
COAL PRODUCTION AND CONSUMPTION UP IN 2022 - EUROSTAT
In 2022, EU coal production and consumption continued to increase, reaching 349 million tonnes (+5% compared with the previous year) and 454 millio ...
Wednesday, 21 June 23
QATAR STRIKES SECOND BIG LNG SUPPLY DEAL WITH CHINA - REUTERS
Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead i ...
Wednesday, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
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- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
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