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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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Wednesday, 04 March 20
CORONAVIRUS: A WILDCARD FOR BULKS DEMAND - WOOD MACKENZIE
The coronavirus is casting a shadow across commodity markets. It has undermined China’s economic sentiment, putting the country’s growt ...
Wednesday, 04 March 20
THERMAL COAL TO 'PHASE OUT', STRONG DEMAND FOR COKING COAL: PLATO - SYDNEY MORNING HERALD
Plato Investments managing director Don Hamson says Australian iron ore producers are set to benefit in the fallout from coronavirus as China will ...
Wednesday, 04 March 20
CHINA PROVINCE TO CLOSE 10 MLN TONNES OF COAL CAPACITY IN 2020 - XINHUA
Southwest China’s Guizhou Province plans to phase out 10 million tonnes of outdated coal production capacity by closing 80 coal mines in 2020 ...
Wednesday, 04 March 20
UKRAINE PRODUCED OVER 2.55 MLN TONNES OF COAL IN FEBRUARY - UKRINFORM
In February 2020, Ukraine produced over 2.55 million tonnes of coal, which is 0.2% less than planned.
The Coal Miners Union of Ukrai ...
Tuesday, 03 March 20
IMPORTANCE OF MASTER'S CARGO CHECKS - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
Adecision in recent High Court case has made it clear that there is no implied indemnity from a charterer to their counte ...
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- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Economic Council, Georgia
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
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