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