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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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Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
Tuesday, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
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- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- MS Steel International - UAE
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
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