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