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