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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, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 25 March 20
CORONAVIRUS CRISIS IS CRUSHING GLOBAL GDP GROWTH - FITCH RATINGS
The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly “Global Economic Outlook” (GEO) ...
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- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
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