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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, 14 February 20
IS THE US COAL INDUSTRY COMPLETELY BURNED OUT? -FORBES
This is the fourth of a multi-part series on the state of the main sources of energy in the US and how they compare globally. The series will cover ...
Friday, 14 February 20
FITCH RTGS: GLOBAL PORTS VULNERABLE TO CORONAVIRUS - RELATED VOLUME DECLINES
Global ports will see reduced trade volumes as a result of the coronavirus, COVID-19, which would become more severe should Chinese production take ...
Thursday, 13 February 20
INDIA: MAJOR PORTS SHOW MUTED GROWTH IN CARGO AS THERMAL COAL VOLUME SLIDES 15% - BUSINESS STANDARD
A sharp slide of 15 per cent in thermal coal volumes weighed on the performance of major ports during the period of April-January of FY20. The majo ...
Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to r ...
Wednesday, 12 February 20
COAL INDIA WILL EXCEED LAST YEAR'S PRODUCTION FIGURES: OFFICIAL - PTI
Despite coal production being hampered at Dipka mines due to prolonged rains, Coal India Ltd will exceed last year’s production figures, a to ...
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- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
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