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