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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
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