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