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