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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, 17 April 20
OPEC BRACES FOR OIL MARKET'S "HISTORIC SHOCK"
OPEC released its much anticipated April monthly report.
Crude Oil Price Movements
Crude oil prices collapsed in March 2020, rec ...
Friday, 17 April 20
SAUDI ARABIA'S MAY 2020 OSPS FOR CRUDE EXPORTS BODE WELL FOR ASIAN REFINERS - WOOD MACKENZIE
On 13 April, Saudi Arabia announced the Official Selling Prices (OSPs) for its May crude oil exports. The new OSPs speak volumes about Saudi Arabia ...
Friday, 17 April 20
SEABORNE COAL PRICES UNDER PRESSURE AS DEMAND SOFTENS IN CHINA, INDIA - CLYDE RUSSELL
Worrying signs are emerging for coal exporters to the world’s biggest markets in Asia, as top buyers China and India move to favour domestic ...
Thursday, 16 April 20
THERMAL POWER SECTOR FACES BLEAK SCENARIO POST-COVID SITUATION - THE HINDU BUSINESS LINE
The centre should take a fresh look at coal-energy value chain as the sector tops the chart on loan defaults.
Covid-19 may have serv ...
Thursday, 16 April 20
CHINA'S BENCHMARK POWER COAL PRICE FALLS 5 YUAN PER TONNE - XINHUA
China’s benchmark power coal price fell by 5 yuan (about 70 U.S. cents) per tonne during the past week.
The Bohai-Rim Steam-Co ...
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- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Australian Coal Association
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- The University of Queensland
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Planning Commission, India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
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