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