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